WTI rises as Biden comments on Middle East risk

U.S. crude oil prices rose more than 4% on Thursday, posting gains for the third straight day, on fears that Israel could attack Iran's oil industry in retaliation for this week's ballistic missile attack in Tehran.

President Joe Biden was asked by reporters Thursday morning whether the U.S. would support an Israeli attack on Iranian oil facilities. Biden said: “We are discussing it. I think that would be a little – anyway.” The president added: “Nothing will happen today.”

CNBC has reached out to the White House for comment.

Biden's comments were the catalyst that pushed prices higher, said Daniel Ghali, senior commodities strategist at TD Securities. “Geopolitical risks in the Middle East are likely at their highest level since the Gulf War,” Ghali told CNBC.

The US benchmark hit an intraday high of $73.95 a barrel, up about 5.5%. West Texas Intermediate is ahead by more than 7% this week.

Here are energy prices as of Thursday around 2 p.m. ET:

• West Texas Middle School November contract: $73.37 a barrel, up $3.27 or 4.66%. Year-to-date, U.S. crude oil is up more than 2%.
• Brent December contract: $77.23 a barrel, up $3.33 or 4.51%. So far this year, the global benchmark is slightly ahead.
• RBOB gasoline November contract: $2.0825 per gallon, up 4.86%. Year to date, the price of gasoline has fallen by about 1%.
• natural gas November contract: $2.966 per thousand cubic feet, up 2.77%. Year-to-date, gas is up nearly 18%.

The risk of oil supply disruptions is rising as fighting intensifies in the Middle East, but OPEC+ is sitting on a large amount of crude that could step into the breach, according to Claudio Galimberti, chief economist at Rystad Energy.

“For now, these spare capacities prevent prices from escalating amid one of the deepest and most profound crises in the Middle East in the last four decades,” Galimberti told clients in a note Thursday.

OPEC+'s spare capacity would be enough to cover a disruption in Iranian exports if Israel attacks the Islamic Republic's oil infrastructure in retaliation for Tehran's missile attack, said Bjarne Schieldrop, chief commodities analyst at Swedish bank SEB.

The problem, however, is that global reserve oil capacity is heavily concentrated in the Middle East, particularly the Gulf states, and could also be at risk if a major war breaks out, according to TD Securities' Ghali.

If Israel attacks Iran's oil industry, traders would worry about supply disruptions in the Strait of Hormuz, Schieldrop said. “That would represent a significant risk premium for oil,” he told CNBC’s “Street Signs Europe.” The strait is one of the world's most important petroleum trade routes.

As a result, oil prices could rise to $200 a barrel if Israel attacks Iran's oil infrastructure, Schieldrop said.