Maxar overview satellite imagery of the Fortune Galaxy Mahshahr Oil Terminal in Iran.
- Oil prices would spike by $10 to $20 per barrel if an Israeli strike knocks out 1 million barrels per day of Iranian production over a sustained period, according to Goldman Sachs.
U.S. crude oil is set for its best week in two years, after President Joe Biden indicated that the White House is discussing a possible strike by Israel on Iran's crude facilities in retaliation for Tehran's ballistic missile attack.
U.S benchmark West Texas Intermediate is up about 10% for the week, on pace for the biggest weekly gain since Oct. 7, 2022. Global benchmark Brent is ahead more than 9% this week.
Get top local stories in San Diego delivered to you every morning. Sign up for NBC San Diego's News Headlines newsletter.
Oil prices would spike by $10 to $20 per barrel if an Israeli strike knocks out 1 million barrels per day of Iranian production over a sustained period, said Daan Struyven, head oil analyst at Goldman Sachs.
Just how high prices would go depends on whether OPEC uses its spare oil capacity to plug the gap, Struyven said.
Here are today's energy prices at around 12:40 p.m. ET:
- West Texas Intermediate November contract: $74.93 per barrel, up $1.22, or 1.66%. Year to date, U.S. crude oil has gained more than 4%.
- Brent December contract: $78.70 per barrel, up $1.08, or 1.39%. Year to date, the global benchmark has risen more than 2%.
- RBOB Gasoline November contract: $2.0994 per gallon, up 0.32%. Year to date, gasoline is little changed.
- Natural Gas November contract: $2.855 per thousand cubic feet, down 3.87%. Year to date, gas is ahead more than 13%.
Though oil prices have surged this week on geopolitical tensions, they have risen from a low baseline. Just last month, prices hit their lowest level in nearly three years as bearish sentiment swept the market on soft demand in China and plans by OPEC+ to increase production.
Money Report
"The risk to the oil price outlook are definitely significant," Struyven told CNBC's "Squawk Box Asia" Friday. The oil market had largely ignored the escalating war in the Middle East until Iran launched nearly 200 ballistic missiles at Israel on Tuesday.
"Geopolitical risk premium priced into oil markets until basically today was quite moderate," Struyven said. Brent prices at around $77 per barrel are still below Goldman Sachs' view of what constitutes fair value based on inventory levels, he said.
The risk premium has been modest because there haven't been sustained supply disruptions over the past two years despite high geopolitical tensions, Struyven said. There is also about 6 million barrels per day of spare capacity on the sidelines that can come online and offset tightness from most supply disruption scenarios, the Goldman Sachs analyst said.
