Oil prices rise as Israel prepares for possible Iranian attack

Oil (CL=F, BZ=F) prices are rising amid escalating tensions in the Middle East. Ines Ferré joins Market Domination to explain the spike in prices, noting a report that Israel is preparing for an Iranian attack. In February, Iran produced roughly 3.2 million barrels of oil per day, according to the US Energy Information Administration; any interruption to that output would cause a temporary spike in the cost of oil.

Ferré adds that analysts foresee a path in which oil hits the $100 benchmark, but anticipate that OPEC would step in with temporary capacity to avoid losing market share to the US.

For more expert insight and the latest market action, click here to watch this full episode of Market Domination.

This article was written by Gabriel Roy.

Video Transcript

JARED BLIKRE: Turning now for a look at oil. Prices rising amid escalating tensions in the Middle East. Here with the latest is Yahoo Finance's Ines Ferre. Ines.

INES FERRE: Yeah, Jared. And we saw crude oil prices go up as much as 3% throughout the session today. Then paring back some of those gains. And that is because of reports that Israel is preparing for an attack from Iran, an imminent attack as these reports have been saying.

So this has sent oil prices higher. Remember that Iran produces roughly 3 million barrels of oil per day. So really any interruption to that output would cause a temporary spike in the price of oil. Now, I have to mention that oil right now, WTI is up 21% year-to-date.

Brent crude is up 18% year-to-date. And all the analysts are saying, look, OPEC really holds the reins here when it comes to these oil prices. Around the $90 Brent price, that is sort of the top of the price that OPEC would want to see these oil prices at.

If you get those prices up to much higher, then they would fear that there would be a recession. And you have demand destruction starting to kick in. So analysts are really saying that, yes, you could see a path to $100 oil, or if this Middle East war escalates suddenly. Then you could see a temporary spike.

But then what they're anticipating is that OPEC would come in and step in with spare capacity because they do not want to lose market share to the US the way they have in the past. And they don't want the oil prices to go so high, then that you have demand destruction guys.