Concerns increased after US President Joe Biden spoke, on Thursday, of ongoing “discussions” regarding possible Israeli strikes against Iranian oil facilities, after the missile attack launched by Tehran on Israel.
Biden’s comments contributed to a rise in oil prices by five percent during Thursday’s session, and oil is heading for weekly gains of about nine percent.
Israel and Iran vowed to respond to Tehran’s launch, on Tuesday, of about 200 missiles towards Israel, in retaliation for the assassination of Hamas leader Ismail Haniyeh and Hezbollah Secretary-General Hassan Nasrallah.
According to a report published by Standard & Poor’s Global and viewed by Sky News Arabia, Israel may target Iran’s oil infrastructure, which is one of the first targets that could be targeted by a response.
The Iranian missile attack has significantly increased risks related to energy, trade and oil infrastructure in the region.
Geopolitical experts indicate, according to a report published by CNBC, that Israel can target nuclear sites, but oil infrastructure is considered a more realistic option given the difficulty of destroying fortified nuclear buildings.
Analysts warn that any further escalation could lead to a long-term impact on energy prices, especially if Iranian oil production is targeted.
Impact on oil markets
Dr. Amer Al-Shobaki, an international economic and energy advisor, said in a statement to Sky News Arabia that Israel’s targeting of Iranian oil infrastructure could be a compromise between an all-out war and a low-paced escalation, but targeting these economic facilities may have repercussions on oil markets.
Iran plays a major role in the global oil market, as it is a member of OPEC, and its production exceeds 3 million barrels per day at the present time, which is its highest level in five years.
Includes sector Iranian oil Ten major refineries, the three largest of which are located in Isfahan, Abadan, and Bandar Abbas, produce a large portion of the country’s energy needs.
The Bandar Abbas refinery alone produces about 40 percent of Iran’s gasoline needs.
Aside from oil facilities, the Strait of Hormuz is considered one of the most important sea crossings for oil supply chains in the world, as more than a quarter of the total oil transported by sea in the world passes through it, according to the Energy Information Agency.
Any disruption of this strait, if war breaks out, could cause major disruption to supply chains, which could raise energy prices.
Al-Shoubaki stated in his statements that, “If Iran wants to escalate, it may cut off the Strait of Hormuz, which will make the ability of countries to export oil outside this strait limited,” adding that in this case oil prices will rise to between 100 and 120 dollars per barrel.
But on the other hand, a Reuters analysis stated that the OPEC+ alliance, which has surplus oil capabilities, has the ability to compensate for the absence of all Iranian supplies if Israel strikes Iranian oil facilities.
Despite this, analysts warn, according to CNBC, that any obstruction to trade in the Strait of Hormuz could negate the effect of OPEC’s spare capacity, which would lead to a sharp rise in prices.
If Israel targets Iran’s oil infrastructure, especially its export capacity, which amounts to about 1.8 million barrels per day, prices could rise by at least $5 per barrel initially, with potential for additional increases of up to $10 per barrel depending on the extent of the damage and whether Iran retaliates. According to a CNBC report.
