Oil Prices will rise 23% if Israel attacks Iran

Oil prices could surge by as much as $175/bbl according to a new analysis of the impact on oil markets following an Israeli attack on Iran and subsequent closure of the Strait of Hormuz, Oil and Gas Journal reported quoting an industry analyst and results of a survey. Washington, DC-based Rapidan Group Head Robert McNally said, "Concern is rising among officials in Washington and Jerusalem that Israeli leaders increasingly favour unilateral military action to slow Iran''s pursuit of a nuclear weapon." Israeli leaders have said they favour a diplomatic solution, but a spate of Israeli media reports on a possible strike have appeared this week, accompanied by veiled threats from top politicians. In an effort to determine the impact of such an attack on oil markets, Rapidan asked market participants what price response they would anticipate, taking into account current supply, demand, and stocks fundamentals. According to McNally, a White House oil advisor in 2001-03, the new survey points to a price reaction somewhat stronger than a similar one undertaken last in December reflecting "tighter fundamentals" since then. The survey''s results reveal, oil prices would rise on average by 23% in the first hours of the attack. However, some market participants anticipate a spike of close to $45/bbl. Rapidan Group asked market participants about their price view 30 days after the attack, taking into consideration the magnitude of the supply disruption and the response of the International Energy Agency. Participants said prices would increase by $11/bbl under Rapidan’s short disruption scenario: Change in crude prices relative to prestrike levels after 30 days, assuming a short disruption only in Iran''s oil exports lasting just a few days without any other interruption in supply. (QNA) SSS/MD