LIVE MARKETS-Where next for oil prices

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WHERE NEXT FOR OIL PRICES

Oil prices have spiked on Friday after Israel hit Iranian nuclear and missile facilities with airstrikes, even though oil & gas infrastructure has so far been untouched by the bombardment.

According to RBC analysts, the ultimate landing point for oil prices will likely hinge on whether Iran revives its 2019 playbook, targeting tankers, pipelines and key energy facilities across the region.

The focus is on the Strait of Hormuz, which sees 20.9 million barrels transported through it on a daily basis, equivalent to about 20% of global production.

"It is our understanding that it would be extremely difficult for Iran to close the Strait for an extended period given the presence of the U.S. Fifth Fleet in Bahrain," RBC says.

"Nevertheless, Iran could still launch attacks on tankers and mine the strait to disrupt maritime traffic."

Looking forward, RBC says that if this proves to be an extended military operation, then Israel could seek to eliminate the primary source of funds for Iran's proxy network and nuclear programme, i.e. energy revenues.

"If oil is caught in the cross-fire, we anticipate that President Trump will seek OPEC spare barrels to try to keep a lid on prices and shield U.S. consumers from the economic impact of the Middle East conflict," RBC says.

(Samuel Indyk)

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