Global energy markets are walking a tightrope as the Israel-Iran conflict threatens to unleash supply disruptions that could rival the oil crises of the 1970s.

According to BCA Research’s note, the world faces a stark reality: a 55% probability of major oil supply shocks exceeding 10 million barrels per day, with potential price swings of 50-100% over the next six months.

The conflict has evolved beyond nuclear facilities to target Iran’s regime itself, fundamentally changing the escalation dynamics.

With Israel pursuing maximum objectives and Iran’s survival at stake, the situation presents a 70% probability of energy supply disruptions as Tehran seeks to pressure the United States into restraining Israeli actions, BCA added.

Market complacency appears misplaced despite Monday’s 1.7% drop in Brent crude and declining gold prices, as the underlying volatility remains explosive, adds brokerage.

BCA Research predicts a 45% chance of continued Israeli escalation, 30% probability of U.S. restraint, and 25% odds of direct American military intervention—each scenario carrying distinct implications for global energy supplies.

“We assign 70% odds that if Israel keeps pummelling Iran, Iran will cause at least some energy shocks,” the note states, highlighting Iran’s strategic calculus.

Canadian energy companies and Gulf Cooperation Council equities face heightened volatility, while broader commodity markets prepare for potential shocks comparable to historical crises in 1973, 1979, and 2022.

Market implications suggest a major supply shock would go well beyond OPEC’s and Russia’s spare capacity of 6-8 million barrels per day, potentially triggering price moves of 50%-100% comparable to major oil shocks in previous decades.
Source: Reuters