Oil markets could be in for a major shock as President Donald Trump mulls a military strike on Iran, according to a top energy analyst.
The Islamic Republic responded to domestic unrest with unprecedented violence, slaughtering tens of thousands of people since protests broke out in late December.
Trump warned the regime not to kill protesters and vowed help was on the way. While he reportedly held off on an attack last month, the recent arrival of a U.S. aircraft carrier in the Middle East has raised expectations that a strike is imminent.
“We would put 75% odds in the coming days to weeks there will be some sort of U.S. attack on Iran,” Bob McNally, Rapidan Energy Group founder and former White House energy advisor, told CNBC on Thursday.
Brent crude oil futures have jumped 5% in the past week and 14% since the start of the year. Prices have now broken their year-long pattern of a steady decline punctuated by brief spikes that quickly reverse to resume the downtrend, he noted.
The U.S. attack on Iran’s nuclear facilities last year only resulted in a temporary price surge as the conflict remained limited in scope and avoided the country’s oil infrastructure.
In addition, the U.S. military raid last month to capture Venezuelan dictator Nicolas Maduro failed to move the needle much in oil markets as production wasn’t interrupted.
“But this one is real,” McNally warned. “The markets are pricing the risk that this time the past will not indicate the future—that we could have a sustained disruption in energy flows.”
Iran pumped 4.7 million barrels per day last year, accounting for 4.4% of global oil supplies. Much of its heavily sanctioned shipments go to China via a so-called shadow fleet.
Related: A ‘tear down the wall’ moment in Iran will damage both the Islamic Republic — and China.
