Commodity Report: Meeting Oil Demand a Challenge if Israel Hits Iran Oil

Oil market participants have switched to dreading a shortage in fuel from focusing on impending oversupply in just two days this week.

After Israel attacked Iran and Tehran pledged to retaliate, oil prices jumped as much as 13% to their highest since January as investors price in an increased probability of a major disruption in Middle East oil supplies.

Part of the reason for the rapid spike is that spare capacity among OPEC and allies to pump more oil to offset any disruption is roughly equivalent to Iran's output, according to analysts and OPEC watchers.

Saudi Arabia and the United Arab Emirates are the only OPEC+ members capable of quickly boosting output and could pump around 3.5 million barrels per day (bpd) more, analysts and industry sources said.

Iran's production stands at around 3.3 million bpd, and it exports over 2 million bpd of oil and fuel.

There has been no impact on output so far from Israel's attacks on Iran's oil and gas infrastructure, nor on exports from the region.

But fears that Israel may destroy Iranian oil facilities to deprive it of its main source of revenue have driven oil prices higher. The Brent benchmark last traded up