The German-based Scope Ratings agency highlighted Cyprus and Egypt as facing the most immediate credit risks, among the nations they rate, in light of the ongoing Israel-Hamas conflict.

In their report, "Hamas Attacks Test Israel’s Economic Resilience; Adds Risk to Regional Stability, Global Growth", Scope Ratings pinpointed Egypt, rated at B-/Negative Outlook, as a major risk. The country is grappling with significant challenges and shares a border with the Hamas-dominated Gaza. Cyprus, rated at BBB/Stable, is also flagged due to its reliance on Israel for oil and gas provisions.

Meanwhile, Türkiye, with a foreign-currency rating of B-/Negative, is anticipated to augment its regional sway. The agency foresees Türkiye "enhancing its role in fostering regional stability, reminiscent of its contributions during Russia’s conflict with Ukraine."

The agency also expressed concerns regarding a potential escalation of the Israel-Palestinian conflict. If such an escalation causes oil prices to consistently surpass USD 100 per barrel, in comparison to the current Brent crude price of approximately USD 88/barrel, apprehensions regarding global inflation and the subsequent actions of central banks would intensify. This, Scope Ratings suggests, could negatively impact global economic growth and sovereign ratings in the medium term, extending beyond Israel's immediate context.

The resurgence of the Israel-Palestinian conflict to the forefront of Middle Eastern politics is raising concerns about potential long-term effects on oil prices, Scope continues. 

The agency further notes that escalating geopolitical tensions may hinder the smoothening of diplomatic ties between Saudi Arabia and Israel. An historic agreement between these two nations could be seen as a significant foreign policy win for US President Joe Biden, especially ahead of next year's elections.

However, the German-based firm warns that the Israel-Gaza conflict could potentially spill over into other areas of the Middle East. This is particularly concerning given that Iran, a major sponsor of both Hamas and Hezbollah in Lebanon, plays a significant role in the region.

Broadly speaking, Scope points out that oil-producing countries in the Middle East and North Africa are among the top global military spenders relative to their economic output. This comes amid several unresolved civil wars in countries such as Libya, Sudan, Syria, and Yemen.

According to the agency's data, Saudi Arabia and Libya allocate around 9% of their GDP to military equipment, Oman 8%, the United Arab Emirates, Algeria, and Israel nearly 6%, while Ukraine, Qatar, South Sudan, and Kuwait spend about 5% of their GDP.