A dramatic upswing in oil prices over recent months could soon create a “particularly hostile environment” for global investors, Citi economists warned Monday.

The price of crude has risen over the past two years, from $26 in 2016 to $77 on Monday, as the balance between supply and demand has been steadily tightening. This has helped boost company’s profits too — with several oil and gas producers and refiners among the biggest gainers on Wall Street over the past month.

However, President Donald Trump‘s decision to pull the U.S. out of the Iran nuclear deal “constitutes a major geopolitical shift” which could trigger a move in the direction of “stagflation,” a global strategy team at Citi, led by Mark Schofield, said in a research note published Monday.

The combination of subdued economic growth and rampant inflation — also known as stagflation —would likely create a “particularly hostile environment for risk assets,” the U.S. bank added.

Alongside a broader escalation in regional conflict, Citi economists argued that a sustained increase in oil prices and weaker-than-anticipated global economic growth data could combine to heighten the risk for financial market participants.

Last week, Trump vowed to quit the landmark 2015 accord and promised to re-impose sanctions on Iran. The contentious decision, which was largely at odds with the international community, has stoked anxiety in the Middle East.

Iran pumps approximately 4 percent of the world’s oil, with the looming prospect of American sanctions set to cut off some of that supply.

When sanctions were imposed by the Barack Obama administration on Tehran in 2012, Iran’s oil exports dropped to approximately 1.5 million barrels per day (bpd). Since the export restrictions were lifted in 2015, as part of the multilateral deal that offered economic relief in exchange for curbs to Iran’s nuclear program — formally known as the Joint Comprehensive Plan of Action (JCPOA) — that figure increased by more than 1 million.

Most analysts predict the impact on Iranian crude supply later this year will be more limited, especially in comparison to Obama’s 2012 sanctions — they say Trump could reduce Iran’s oil shipments by 300,000 to 500,000 bpd, far short of the 1 million to 1.5 million bpd that were cut from the market six years ago.

OPEC, Russia and several other allied producers have spearheaded an ongoing effort to try to clear a global supply overhang and prop up prices. The agreement, which came into effect in January 2017, has already been extended through until the end of this year — with producers scheduled to meet in June to review policy.

“Is OPEC, possibly together with its non-OPEC peers, going to fill the void potentially left in global supply by Iran? Time will tell and until then, all that is certain is volatility,” Tamas Varga, analyst at PVM Oil Associates, said in a research note published Monday.

— CNBC’s Natasha Turak contributed to this report.