How the attack on Iran could impact the global oil market and economy

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The joint U.S. and Israeli attack on OPEC member Iran risks a major oil supply disruption in the Middle East that, in a worst-case scenario, could trigger a global economic recession.

Iran is the fourth-largest oil producer in OPEC at just over 3 million barrels per day in January. The Islamic Republic shares a coastline with the Strait of Hormuz, the world’s most important waterway for the global oil trade.

The oil market has long shrugged off the risk of an oil supply disruption in the Middle East. Traders are underestimating the threat that Iranian retaliation to the U.S. attack poses to the market, said Bob McNally, a former White House energy advisor to former President George W. Bush.

“This is the real deal,” said McNally, founder and president of Rapidan Energy. Crude oil future prices will likely rise by $5 to $7 per barrel when trading opens at 6 p.m. ET Sunday as the market prices in some risk, he said.