It’s been a volatile start for the 2009 oil markets, with supply issues in Russia, a burgeoning military conflict in the Middle East, and big oil reserve moves by the U.S. and China all fueling a rise in energy prices across the board.

Oil prices are hovering around $50 per barrel early in the week, as continued tension between Israel and Hamas over the historically disputed Gaza tribal lands is once again being “resolved” with missiles, guns and bullets. Several thousand miles to the north, Russian energy behemoth Gazprom has tightened natural gas supplies through its Ukraine pipeline, causing consternation in Russia and the Baltic states. The Ukraine pipeline is a vital one for the European energy markets, providing much of the oil for the continent. So any restriction in supply is going to trigger political upheaval, as well as higher oil prices in the region.

Back here in the states, the U.S. Energy Department announced last week that it will start taking full advantage of lower oil and gas prices and begin buying up oil for the 727 million-barrel Strategic Petroleum Reserve. China recently rolled out a similar initiative. This was inevitable, given the anxiety over higher oil and gas prices in the U.S. last summer, and the subsequent debate over whether to drill off the U.S. coast and in Alaska or not. While that debate continues with a new anti-drilling resident in the White House in Barack Obama, the safe and relatively inexpensive thing to do in the meantime is to buy up cheap oil for U.S. reserves.

Still, it’s very much a stop-gap measure. The U.S Strategic Oil Reserve only holds enough for 70 days worth of the country’s formidable energy needs. Historically, the reserve has mostly been used for military conflicts and for natural disasters like Hurricane Katrina, the aftermath of which spurred sales of $600 million in oil saves from the reserve to critically-hit areas in Louisiana, Texas, Mississippi, and Alabama.

But it’s Gaza that is causing most of the disturbance in oil prices this week. Israel is almost two-weeks into an aggressive military campaign, essentially carpet-bombing the Gaza Strip from warplanes high above the sand. That’s a pretty big deal for a lot of reasons, but for oil investors, the notion of the world’s largest deposit of oil (the Mideast accounts for one-third of all the world’s oil supply) translates into an unstable situation that, if it proliferates, may trigger even larger increases in the price of oil throughout 2009 and beyond.

History supports that outlook. In the same region in 1974, a military conflict between Israel and Arab nations that led to a massive oil embargo was a primary cause for the global recession of the mid-1970’s. And in 2006, after the Israel-Lebanon skirmish, oil prices soared to a record (at the time) of almost $79 a barrel. It says here that, in this fragile global economy, it can certainly happen again.

It certainly doesn’t inspire confidence to hear Israeli Defense Minister Ehud Barak say that his country is fighting “a war to the death”. Considering that Hamas’ biggest national backer is Iran, which is the second-largest oil producing nation on the planet, and it’s fair to say; “Houston, we have a problem.”

My take? I’m not a geopolitical expert nor do I want to be one. But I do know something about the impact of volatile events on oil prices. If this conflict goes regional and Iran gets into the mix, you can expect to see oil prices skyrocket. That would set off a domino effect worldwide, with any potential gains in an already flattened stock market wiped out, and the higher energy prices we would subsequently see would be the worst thing that consumers and businesses need during a steep recession.

It’s a grim scenario and I obviously hope it never comes to pass. But it’s happened before and oil investors should best be ready – for anything.