On Thursday, international ratings agency Moody’s issued a statement on the agency’s website noting it was placing Israel’s A1 credit rating on review for a downgrade.

The cause for the review was said to be the potential escalation of the conflict between the Israeli Defense Force (IDF) and the Palestinian militant group Hamas.

Moody’s said, “Israel’s credit profile has proven resilient to terrorist attacks and military conflict in the past. However, the severity of the current military conflict raises the possibility of longer lasting and material credit impact.”

The agency noted it will perform a comprehensive review of the situation, examining the effect of the duration and the scale of the conflict, and its likely effect on the economy, institutions, and public finances of Israel. It noted that due to the complexity, the review may take longer than the agency’s customary three-month review process.

Moody’s said, “While a short-lived conflict could still have credit impact, the longer lasting and more severe the military conflict, the greater its impact is likely to be on policy effectiveness, public finances, and the economy.”

Earlier in the week, another ratings agency, Fitch, placed the A+ sovereign credit rating of Israel on a “rating watch negative,” also pointing to the crisis in Gaza as the reason. It warned that the credit metrics of Israel could be significantly deteriorated should the crisis escalate and expand to other countries in the Middle East.

Israel has never been downgraded by a ratings agency. Should the nation be downgraded, it could hamper the ability of the country to borrow abroad, having profound effects on the plans of the nation to invest in economic expansion.

Earlier this month the Palestinian militant group Hamas launched a cross-border incursion into Israeli territory, killing and kidnapping Israeli citizens, before fleeing back into the Gaza strip. Israel responded by blockading Gaza, and launching a bombardment, as it reportedly prepares a ground invasion.

The prices of crude oil have surged in response to the escalation of the conflict, as traders consider a potential disruption of supplies in the region. Projections by Bloomberg Economics have indicated that were the crisis to spread to the broader Middle East, oil prices could surge to $150 per barrel, causing the global economy to fall into a recession.