Commodity analyst at SEB, Bjarne Schieldrop in his statement said oil prices could rise to $200 if Iran's energy infrastructure is eliminated by Israel. His comment was the result of a discussion on the outlook for the oil market amid war tensions in the Middle East on CNBC.
Iran is a major oil producer and exporter and any disruption to its infrastructure could have far-reaching effects on global oil supplies.
There are several factors that can drag the price of the famous commodity to soar and cause problems for other countries.
Among the topics that need to be known is that Iran holds ownership of approximately 10% of the world's oil reserves. Any major damage to its production or export capabilities would cause significant supply shocks and tighten global markets.
The instability of the Middle East region continues to spread following the conflict between Israel and Iran that could involve other regional players such as Saudi Arabia, the UAE and Iraq which are all major oil producers.
Escalating tensions could also cause disruption to oil transport routes in the Strait of Hormuz through which about 20% of the world's oil passes.
In addition, worsening war sentiment will trigger oil market speculation and increase prices. Investors may react quickly to news of an attack on Iran's infrastructure by Israel.
In such a situation, sanctions may be imposed on Iran or other parties to worsen the supply of crude oil.
However, the level of $200 per barrel is an extreme price target as the current level is still stable below $80 per barrel.
Logically, it all depends on how the situation develops and how long the disruption lasts.
