Inflation fears are back in the spotlight as the Middle East conflict keeps oil prices elevated, analysts say

BlackRock estimates that the conflict will add around 0.8 percentage points to global headline inflation, though the impact may not be uniform across all regions.

Europe and parts of Asia, which are more reliant on energy imports, will remain more exposed to global headline inflation, BlackRock said in a note.

OCBC agreed, in a report saying that “with labor market data pointing to stabilization rather than deterioration, a fresh energy shock would leave the Fed focused on upside inflation risks.”

While profit margins increasing for U.S. small- and mid-cap companies in the equity markets is a positive development, “I’m not sure that those trends can withstand a couple of quarters of higher oil prices and continued strains with inflation pressures,” Yung-Yu Ma, chief investment strategist at PNC Asset Management said on CNBC’s “Squawk Box Asia.”

The Fed hawkishness is “here to stay,” Ma reckons, “until we start to see relief in the energy markets, the oil markets, and some of these other inflation pressures, which have taken a renewed path higher.”

“We have to think about a balanced portfolio here, where to diversify some of that risk away,” Ma said.