Global investors may be underpricing the impact of a conflict between Israel and Iran, market watchers warned on Monday, as stocks rallied despite escalating warfare in the Middle East. The two regional powers continued trading fire on Monday, marking the fourth consecutive day of fighting since Israel launched airstrikes against Iran last week.

The ongoing Israel-Iran conflict could trigger global instability, spike oil prices, disrupt trade routes, increase inflation, and strain diplomatic relations, forcing countries like India into comple

The International Energy Agency tweaked its global oil demand forecast, now expecting demand to rise by 720,000 barrels a day this year versus 740,000 barrels previously, citing weak second-quarter deliveries in the U.

The escalating tensions between Iran and Israel are also sending shockwaves through global stock markets, with India’s benchmark Sensex closing 573 points lower on Friday.

The ripple effect of the back-to-back strikes between Israel and Iran were seen in the U.S. stock market on Friday. CBS News MoneyWatch correspondent Kelly O'Grady has more.

The latest military attack on Iran by Israel has tanked stock markets and pushed up oil prices, but most asset managers think the impact on the U.S. economy and markets will be temporary as long as the conflict does not escalate further.

Iranian media report new Israeli attacks on the west of the country on Monday, after Iranian strikes broke through Israel's iron Dome defences overnight.

Iran launched a wave of missiles just hours after Israel said it was striking missile sites in central Iran. Israel says it hit Quds Force command centers.