U.S. crude oil prices rose about 5% on Thursday, posting a third consecutive session of gains on fears that Israel could strike Iran’s oil industry in retaliation for Tehran’s ballistic missile attack this week.

President Joe Biden was asked by reporters Thursday morning whether the U.S. would support an Israeli strike on Iranian oil facilities. Biden said: “We’re discussing that. I think that would be a little – anyway.” The president added that “there’s nothing going to happen today.”

CNBC has reached out to the White House for comment.

Biden’s comments were the catalyst that moved prices higher, said Daniel Ghali, senior commodity strategist at TD Securities. “Geopolitical risks in the Middle East are probably at their highest levels since the Gulf War,” Ghali told CNBC.

The U.S. benchmark surged 5.5% earlier in the session to an intraday high of $73.99 per barrel. West Texas Intermediate is ahead about 8% this week, on pace for its best weekly gain since March 2023.

Here are Thursday’s closing energy prices:

  • West Texas Intermediate November contract: $73.71 per barrel, up $3.61, or 5.15%. Year to date, U.S. crude oil has gained nearly 3%.
  • Brent December contract: $77.62 per barrel, up $3.72, or 5.03%. Year to date, the global benchmark is ahead nearly 1%.
  • RBOB Gasoline November contract: $2.0926 per gallon, up 5.37%. Year to date, gasoline has fallen less than 1%.
  • Natural Gas November contract: $2.97 per thousand cubic feet, up 2.91%. Year to date, gas has gained about 18%.

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

“This spare capacity is for now preventing runaway prices amid one of the deepest and most pervasive crises in the Middle East in the past four decades,” Galimberti told clients in a Thursday note.

OPEC+ spare capacity would be sufficient to cover a disruption to Iran’s exports if Israel strikes the Islamic Republic’s oil infrastructure as retaliation for Tehran’s ballistic missile attack, said Bjarne Schieldrop, chief commodities analyst at the Swedish bank SEB.

The problem, however, is that the world’s spare oil capacity is heavily concentrated in the Middle East, particularly the Gulf states, and could also be at risk if a wider war breaks out, according to Ghali with TD Securities.

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

As a consequence, oil prices could surge to $200 per barrel if Israel hits Iran’s oil infrastructure, Schieldrop said.

Don’t miss these energy insights from CNBC PRO: