The oil market posted a high for the week after Iran launched a large-scale ballistic missile attack on Israel and dragged prices over 5% on Tuesday.
For months, market sentiment has remained risk-averse regarding volatile supply disruptions in the Middle East.
Conversely, bearish sentiment hit the market in September as investors grew concerned about next year's surplus due to weak demand in China and increased production from OPEC+.
According to former US soldier Jack Jacobs, Israel could also target Iran's nuclear facilities but the building was 'hardened' and made it difficult to destroy. They can use high-powered missiles to make it difficult for Iran's defense.
OPEC member Iran is producing at a five-year high of more than 3 million barrels a day and US Intelligence revealed potential risks to Iran's Kharg Island oil terminal through which 90% of the country's crude exports pass.
The impact on the oil market will depend on the damage done to Iran's crude exports and how the war escalates from there.
If Iran's oil exports of around 1.8 million barrels a day are taken offline, prices are likely to jump by at least $5 a barrel.
