When risk aversion eventually begins to ebb, the potential reinvestment of the existing lake of liquid assets back into riskier assets could be very powerful and very sudden. The path of oil prices is an important issue. When Iraq attacked Kuwait a decade ago, oil prices surged. This contributed to a sharp weakening of confidence. Today, in contrast, the negative effect of past oil price rises has already occurred.
Oil prices are already at the high end of the range of the last decade.
Brief oil price spurts are possible if there is an upward shift in desired oil inventories because of uncertainty. But price spurts based on shifts in desired inventories are likely to be temporary, especially since the demand for oil will be weak due to world economic weakness. There would be a more severe impact if there were a major disruption in the flow supply of oil. There are economic effects from either the fear of an oil supply disruption or the reality of an oil supply disruption. But the effects are much less if oil supply disruption is feared but does not occur.