Analysts: Imminent threat to oil supplies amid Middle East events

Oil watchers are warning of a real threat to crude supplies now that Iran has launched a ballistic missile attack on Israel, escalating the conflict in the Middle East.

Analysts told CNBC that Iranian oil infrastructure could soon become a target for Israel as it considers a counter-move.

“The conflict in the Middle East could impact oil supplies,” said Saul Kavonic, senior energy analyst at MST Marquee. “The potential for a major disruption to oil supplies is now imminent.”

He said the latest developments could be a major change, after a long period of “geopolitical risk” during which traders shrugged off threats of oil supply disruptions from the Middle East as well as Ukraine.

Kavonic added that up to 4% of global oil supply is at risk as the conflict now directly surrounds Iran, and an attack or tougher sanctions could send prices back to $100 a barrel.

Other analysts echoed that sentiment. “As Israel shifts from Gaza to Lebanon and Iran, the war is entering a new, more energy-related phase,” Bob McNally, president of Rapidan Energy Group, told CNBC, adding that he expected Israel’s response to the rocket attack to be “disproportionately large.”

Ross Shapp, head of research at GeoQuant, which uses structural and high-frequency data to generate political risk scores, said the risk model the organization uses for the Israel-Iran conflict, which has been within three standard deviations of the average trend over the past 12 years, has seen a significant spike after the latest missile strikes.

Shapp said the findings suggest “much larger events” are likely to follow.

Josh Young, investment manager for oil at Bison Interests, who is also monitoring the growing likelihood of a potential strike on Iranian oil infrastructure and disruption to oil supplies, said this represents a “major escalation.”