Oil prices could see ‘super spike well above $100’ if conflict escalates after Iran’s attack on Israel

Oil
prices
could
soar
to
$100
per
barrel
and
beyond,
said
market
watchers,
after
Iran
mounted
an
aerial
attack
against
Israel
reigniting
fears
of
a
regional
war.

Iran
is
home
to
vast
oil
resources
and
is
the
third-largest
producer
in
oil
cartel
OPEC.
Any
disruption
in
its
capacity
to
supply
global
markets
could
send
oil
prices
higher,
analysts
told
CNBC.
Markets
will
also
closely
monitor
for
developments
or
closure
of
the
Strait
of
Hormuz,
a
key
chokepoint
which
sits
between
Iran
and
Oman
and
through
which

one-fifth
of
global
oil
production flows
daily.

“Any
attack
on
oil
production
or
export
facilities
in
Iran
would
drive
the
price
of
Brent
crude
oil
to
$100,
and
the
closure
of
the
Strait
of
Hormuz
would
lead
to
prices
in
the
$120
to
$130
range,”
said
Andy
Lipow,
president
of
Lipow
Oil
Associates.

Iran
fired
over
300
drones
and
missiles
on
Israel
on
Saturday
night,
marking

the
first
instance
Iran
launched
a
direct
military
attack
on
the
Jewish
state.
A

“vast
majority”
of
the
Iranian
drones
and
missiles
were
intercepted,
according
to
Israel
Defense
Forces
spokesperson
Rear
Adm.
Daniel
Hagari.
He
said
a
10-year-old
girl
was
“severely
injured
by
shrapnel,”
but
that
there
were

no
other
casualties.

Iran’s
attack
was
in
retaliation
to
an
Israeli
strike
on
its
consulate
in
Damascus,
Syria
earlier
this
month.
Iran
accused
Israel
of
bombing
part
of

its
embassy
compound
on
April
1,
killing
seven
Iranian
military
personnel,
including
three
senior
commanders.

Iran’s
United
Nations
mission
declared
that
following
the
aerial
attack,
the
“matter
can
be
deemed
concluded.”
It
warned,
however,
that
its
response
would
be
“considerably
more
severe”
should
there
be
further
Israeli
retaliation.

Oil
prices
traded
slightly
lower
in
early
morning
trading
in
Asia.

Global
benchmark
Brent
slipped
0.31%
to
$90.17
a
barrel
Monday,
while
U.S.

West
Texas
Intermediate
futures
fell
0.44%
to
trade
at
$85.28
per
barrel.

Compounded
by
years
of
underinvestment
in
oil
exploration
and
development,
the
recent
geopolitical
development
renders
global
crude
supplies
more
vulnerable,
said
Josh
Young,
portfolio
manager
at
oil
and
gas
investment
firm
Bison
Interests.

“Insufficient
investment
makes
supply
more
fragile
and
increases
the
chance
of
a
super
spike
well
above
$100
if
supply
is
disrupted,”
he
said.

“I
think
oil
prices
will
go
to
all
time
highs
this
cycle,
due
to
a
decade
of
under-investment
in
exploration
and
development,”
Young
added.

Oil
faces
a
sizable
natural
decline
in
output.
The
decline
rate
for
a
conventional
oil
well
is
around
15%,
absent
any
capital
expenditure,
according
to

Morgan
Stanley’s
estimates.

Oil
prices
have
climbed
in
recent
months
on
trade
disruptions
and
delays
caused
by
Red
Sea
maritime
attacks
from
the
Houthis,
who
claim
solidarity
with
the
Palestinian
people.

A
dominant
force
in
Middle
East
politics,
Iran
funds
and
supports
groups
opposing
Israel,
such
as
Palestinian
militant
group
Hamas,
Lebanon’s
Hezbollah,
Yemeni
Houthis
and
Bashar
al-Assad’s
Syrian
administration.
The
ongoing
conflict
in
Gaza
has
often
been
referred
to
as
a

proxy
war
between
Israel
and
Iran. 

U.S.
President
Joe
Biden
condemned
Iran’s
attack
on
Israel,
adding
that
Washington
helped
“take
down
nearly
all
of
the
incoming
drones
and
missiles.”  

“Our
commitment
to
Israel’s
security
against
threats
from
Iran
and
its
proxies
is
ironclad,”
Biden
also

said
separately
on
social
media
platform
X.
But
he
also
told
Israel’s
Prime
Minister
Benjamin
Netanyahu
that
the
U.S.
will
not
participate
in
offensive
operations
against
Iran,
a
senior
administration
official told
NBC
News.

If
Iran
further
escalated
hostilities,
the
U.S.
and
its
allies
would
come
under
“renewed
pressure
to

strengthen
sanctions
once
again,”
Betashares’
chief
economist,
David
Bassanese,
wrote
in
a
note
following
the
attack.

Iranian
oil
exports
have
lifted
over
the
past
few
years
with
the
U.S.
“seemingly
passively
accepting
this
as
a
means
to
keep
downward
pressure
on
world
oil
prices,”
he
added.