Oil prices set to see price swings

Oil markets are closed for the weekend but are set to see price swings next week with the impact of the U.S. strikes on production and transport unclear.

Pre-conflict scenarios have foreseen a quick price spike that fades if Iranian pipelines and its Kharg island terminal remain operational. But there would be a bigger price spike and longer-lasting impact if oil infrastructure or supplies are interrupted, for instance because of disruption of tanker traffic through the Strait of Hormuz that sees 20% of global oil supply pass through each day.

Limited strikes on Iran’s nuclear program and Islamic Revolutionary Guards Corps that avoid a change of government or all-out war could see prices jump $5-$10 based on fear alone, according to Rystad Energy.

A wider war, however, involving Iranian disruption of tanker traffic could see crude push past $90 per barrel and U.S. gas prices “well above” $3 per gallon, according to Clayton Seigle at the Center for Strategic & International Studies.

International benchmark Brent crude closed at a seven-month high of $72.87 on Friday.