Potential Israeli Attack On Iran Would 'Rattle The Nerves Of Oil Market,' Says Expert

Amid rising geopolitical tensions, energy markets are on edge as experts warn of potential disruptions. An Israeli military action targeting Iranian oil facilities could significantly impact global oil prices, according to industry analysts.

What Happened: John Driscoll, chief strategist at JTD Energy Services, highlighted the potential impact of an Israeli attack on Iranian oil facilities. Driscoll noted that such an event could significantly influence oil prices, drawing parallels to past incidents like the 2019 drone attacks on Saudi Arabian oil fields, according to CNBC on Monday.

Driscoll explained that while Iran’s oil production is around 2.5 to 3 million barrels per day, its exports are considerably lower due to sanctions. A disruption in Iranian exports, even by half a million barrels per day, could lead to a substantial price increase. He emphasized that Iran, though not as pivotal as Saudi Arabia or Abu Dhabi, still plays a role that could unsettle the market.

“While Iran is not as critical a player as say the Saudis or Abu Dhabi or Kuwait, you know still this is going to have a dramatic effect. It’s going to rattle the nerves of the oil markets,” Driscoll said.

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The strategist remarked that traders thrive on market volatility, and such geopolitical tensions could provide them with lucrative opportunities. Driscoll warned that the oil market should brace for a turbulent period in the coming weeks, as any military action could create significant fluctuations in oil prices.

Why It Matters: The potential for an Israeli strike on Iranian oil facilities comes amid heightened tensions in the region. Earlier this month, President Joe Biden confirmed that the U.S. had discussions with Israel about targeting Iran’s oil infrastructure, causing oil prices to surge by over 5%. Although Biden appeared hesitant about the idea, the mere possibility has already influenced market dynamics.

Additionally, the U.S. recently imposed new sanctions on Iran’s petroleum and petrochemical sectors following Iran’s attacks on Israel, aiming to cut off revenue streams that fund destabilizing activities in the Middle East. These developments underscore the fragile state of the oil market, where geopolitical events can lead to significant price volatility.

Price Action: On Monday, during the pre-market hours, oil ETFs were showing mixed activity as per Benzinga Pro. United States Oil Fund, LP USO was down by 2.37% while ProShares UltraShort Bloomberg Crude Oil SCO was up by 4.40%. Meanwhile, ProShares Ultra Bloomberg Crude Oil UCO was trading 4.29% lower.

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Disclaimer: This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.

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