Investing.com – The price of oil rose sharply on Thursday and remains near its recent highs on Friday morning, at $77.58 per barrel at the time of writing, following renewed tension in the Middle East, with Israel having launched a major attack against Hezbollah positions in Lebanon.
However, an escalation of the conflict could lead to much greater oil prices, according to many analysts. This is particularly the case of Bjarne Schieldrop, commodities analyst for SEB, who declared on CNBC that oil prices could exceed $200 per barrel of Brent if the escalation of tensions in the Middle East decimates production of crude from Iran.
This would represent an increase of 158% compared to the current price of Brent oil.
Schieldrop noted that Iran produces more than 2 million barrels of crude and offsets daily exports. According to him, if rising conflicts in the region were to wipe out Iran’s oil infrastructure, it would significantly reduce the OPEC+ coalition’s reserve oil capacity.
This not only means higher prices, but also increased uncertainty in the market: “The next question in the market would be what happens now in the Strait of Hormuz, which, of course, would add a premium significant risk to oil,” he explained.
