Senior Israeli officials said this week that their military campaign against Iran could trigger the fall of the regime, an event that would have enormous implications for the global oil market.
The oil market has reacted with remarkable restraint as Israel has bombed the third-largest crude producer in OPEC for eight straight days, with no clear sign the conflict will end anytime soon.
Oil prices are up about 10% since Israel launched its attack on Iran a week ago, but with oil supplies so far undisturbed, both U.S. crude oil and the global benchmark Brent remain below $80 per barrel.
Rising risk
Still, the risk of a supply disruption that triggers a big spike in prices is growing the longer the conflict rages on, according to energy analysts.
President Donald Trump has threatened the life of Iran’s supreme leader Ayatollah Ali Khamenei and is considering helping Israel destroy the Islamic Republic’s nuclear program. For its part, Iran’s leadership is more likely to target regional oil facilities if it feels its very existence is at stake, the analysts said.
Israel’s primary aim is to degrade Iran’s nuclear program, said Scott Modell, CEO of the consulting firm Rapidan Energy Group. But Jerusalem also appears to have a secondary goal of damaging Iran’s security establishment to such an extent that the country’s domestic opposition can rise up against the regime, Modell said.
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