Here's how oil could reach if a conflict broke out with Iran

Oil is on the line of fire as the prospect of a confrontation between the United States and Iran prepares. At least that is how Iranian officials would have it.

Yahya Rahim Safavi, one of the top military aides of Iran's supreme leader, Ayatollah Ali Khamenei, warned over the weekend that "the first bullet shot in the Persian Gulf will drive up the prices of the oil more than 100 dollars ". "This would be unbearable for America, Europe and American allies like Japan and South Korea," he added.

More than a million barrels of oil a day have been dropped from the market following sanctions imposed by the United States following the withdrawal of the Donald Trump administration from the 2015 Iran nuclear deal, aimed at to defeat the exports of the third largest producer of OPEC. This has contributed to the paralysis of the Iranian economy, which, according to the US administration, will continue unless Iran "acts like a normal country" and stops supporting terrorists in the region and attempts to ballistic missiles.

Iran responded to the sanctions by threatening to cancel its obligations under the nuclear deal – which had promised economic relief in exchange for limits to its nuclear development – and to return to higher levels of nuclear power. enrichment of uranium.

A series of attacks in the United Arab Emirates (UAE) and Saudi Arabia, attributable to Iran, has now pushed tensions to new heights and prompted the United States to deploy more troops and equipment military in the region. In a region responsible for shipping one-third of the world's maritime hydrocarbons, how much could the military clash – or even a total war – raise the price of crude oil?

Not as high as you think, according to some experts.

"I think 100 dollars a barrel is ambitious," CNBC badyst Stephen Brennock told CNBC on Tuesday at PVM Oil Associates in London. He pointed out that the oil market has "more or less held the shoulders" of the disappearance of 500,000 barrels of additional Iranian oil a day since Washington ended its exemption from sanctions in May.

"That being said, any direct conflict between the United States and Iran would further reduce shipments from the OPEC country and could even disrupt exports from other producers in the Persian Gulf," he said. Mr. Brennock added. However, he hopes oil will struggle to return to triple-digit prices – largely due to the US-China trade war – and provides a range of $ 80 to $ 90 per barrel as the most important target. likely.

And among the fears of conflict driving up oil prices, it should be remembered that Brent crude has actually fallen sharply in recent sessions, despite growing tensions in the Middle East and supply disruptions in the Middle East. Venezuela and Libya. Brent crude traded at $ 60.78 a barrel at 6:30 am London time on Thursday, up 15 cents and still far from its four-year high, over $ 80 last fall.

Others think that the market could tighten significantly, resulting in a potentially dramatic price hike, but they doubt that it lasts.

"The oil had already reached 100 dollars a barrel and so, in case of conflict, the real price could be much higher," said Michael Rubin, an Arab affairs expert at the American Enterprise Institute in Washington, DC.

It depends, he said, on the ability of other countries to make up for the shortfall in Iran. In case the conflict closes the very important shipping artery that is the Strait of Hormuz, essential oil cargoes from Saudi Arabia and Iraq, the largest and the most important. fourth largest second of the OPEC? Crude producers, respectively, would have a hard time getting into the market.

Still according to Rubin, "the rise will not last long", especially since fracking (in the United States) becomes economic each time the price of a barrel of oil reaches $ 60. "

For Helima Croft, Global Head of Commodity Strategy at RBC Capital Markets, it's all about major damage. If facilities like Abqaiq in Saudi Arabia, the largest oil processing facility in the world, were seriously affected, "we would race," she told CNBC in an email. Attacks on tankers would also cause a sharp drop in the price of oil.

But for now, the market is "quite risk-averse," Croft said, describing oil traders as similar tensions in the Middle East and focusing more on the impact of the trade war and the war. rise of protectionism on demand. between global trading partners.

For the moment, the fear of war does not seem to be on the market. "I think people are waiting to see if there is a real disruption in energy supply in the Middle East," Croft said.