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The intensifying conflict between Iran and Israel has sent oil prices climbing, as traders secure supplies in case the war expands further. Meanwhile, analysts are gaming out how much oil prices could spike depending on what happens next.
Before the escalations, oil prices were “near their lowest levels since 2021,” the Wall Street Journal reported, but oil traders have been buying up supplies since Tuesday, when Iran fired about 180 ballistic missiles at Israel.
Then on Thursday, the benchmark prices for US and foreign oil spiked about 5% after President Joe Biden said the US was “discussing” whether to support a potential Israeli attack on Iran’s oil industry, according to reports by the WSJ and BBC News. It was the largest daily spike since October 2023, in the early days of Israel’s military operation in Gaza following Hamas’s Oct. 7 attacks in Israel, the Journal reported.
Scenarios. An Israeli strike might not directly harm the supply of exported oil from Iran, the Eurasia Group’s Gregory Brew told the WSJ, because much of Iran’s oil isn’t exported. But Iran could respond by trying to close the Strait of Hormuz, which would block Gulf nations from exporting oil and oil-based products. That would be “the worst-case scenario,” Brew said. If those exports were blocked for a week, oil prices could rise as much as $28 per barrel, according to an estimate by ClearView Energy Partners reported in the Journal. The US benchmark price for oil climbed to around $75 in the afternoon on Friday, while the foreign benchmark nearly cracked $80.