The conflict between Israel and the Palestinian Islamist group Hamas is likely to lead to higher volatility and speculation in oil markets, the CEO of Brazil's Petrobras said on Monday, days after a surprise Hamas attack on Israel.

Jean Paul Prates told reporters at an event in Rio de Janeiro that the increased oil volatility would help show how Petrobras' current fuel pricing policy is "working well", noting that the company will probably be able to mitigate such effects.

Petrobras earlier this year implemented a new pricing policy, ditching a more market-based strategy in favor of greater flexibility to smooth price swings, although pledging prices would not dip "below profitability."

"There's not much we can do other than what we have already been doing," the executive said, adding that one of the main effects of the conflict would be higher volatility in diesel prices.

Oil prices surged more than 3% on Monday as military clashes between Israel and Hamas ignited fears of a wider conflict in the Middle East, reversing last week's downtrend.

(Reporting by Rodrigo Viga Gaier; Editing by Steven Grattan)