Oil Market Faces Supply Disruptions as War Spreads in the Middle East

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OPEC,Oil Prices,Middle East Conflict

Analysts warn of rising risks to oil supply due to escalating tensions between Israel and Iran. The potential for Israeli strikes on Iranian oil facilities could lead to price increases, though OPEC's spare capacity may mitigate the impact if the Strait of Hormuz remains open.

The oil market faces a rising risk of supply disruptions as war spreads in the Middle East, geopolitical and crude market analysts say.

"There has been a lot of complacency about this war," Helima Croft, head of global commodity strategy at RBC Capital Markets, said on CNBC's"Israel could also take aim at Iran's nuclear facilities, but those buildings are hardened, making them difficult to destroy, said retired U.S. Army Colonel Jack Jacobs. A strike on those facilities could trigger an even larger ballistic missile attack by Iran that would be difficult to defend against, he said.

"The next turn in this retaliation spiral may very well involve oil – via the degrading of Iran's oil capacity Iran, in turn, would likely retaliate by threatening the 13 million bpd of crude and 5 million bpd of products that are produced in and flow through the Persian Gulf, McNally said. An escalation on this scale could send oil prices higher in increments of $10 per barrel, the analyst said.

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