Oil prices could shoot up $20 per barrel if Iranian production sees a hit resulting from Israeli retaliation, according to Goldman Sachs.

U.S. crude futures rose around 5% on Thursday and ticked higher again Friday morning on concerns that Israel could strike Iran’s oil industry in retaliation for Tehran’s missile attack this week.

It is estimated that “if you were to see a sustained 1 million barrels per day drop in Iranian production, that you would see a peak boost to oil prices next year of around $20 per barrel,” Daan Struyven, Goldman Sachs’ co-head of global commodities research, told CNBC’s “Squawk Box Asia” on Friday.

This is under the assumption that oil cartel OPEC+ refrains from responding by increasing production, Struyven said.

Should key OPEC+ members such as Saudi Arabia and UAE offset some of the production losses, oil markets could see a smaller boost of slightly less than $10 barrel, he added.

Since the Israel-Hamas armed conflict began on October 7 of last year, there had been limited disruptions to the oil market, with prices remaining under pressure due to increased production from the U.S. and sluggish demand from China.

However, the sentiment could be shifting this week. U.S. crude oil prices just saw a third consecutive session of gains after Iran launched a ballistic missile attack on Israel, heightening tensions in the region. In recent days, industry watchers have sounded the alarm, warning of a real threat to supply.

Iran, which is a member of OPEC, is a key player in the global oil market. It produces almost four million barrels of oil per day, and an estimated 4% of the world’s supply could be at risk if Iran’s oil infrastructure becomes a target for Israel as the latter considers a countermove. 

Saul Kavonic, senior energy analyst at MST Marquee, raised the potential of Iran’s Kharg Island, which is responsible for 90% of the country’s crude exports, becoming a target.

“The bigger concern, “is this the kind of a much more imminent beginning of a wider conflagration of the conflict which could impact transit through the Strait of Hormuz,” he added.

If Israel hits Iran’s oil industry, supply disruptions in the Strait of Hormuz could become of concern, other analysts echoed.

Iran has previously threatened to disrupt flows through the Strait of Hormuz if its oil sector is impacted.

The strait between Oman and Iran is a crucial channel through which approximately one-fifth of the world’s daily oil production passes, according to the U.S. Energy Information Administration. This strategically significant waterway connects crude oil producers in the Middle East with major global markets.

Asked by reporters Thursday if the U.S. would support an Israeli strike on Iranian oil facilities, U.S. President Joe Biden said: “We’re discussing that. I think that would be a little – anyway.” Oil analysts think those remarks were the catalyst that moved prices higher.

CNBC has reached out to the White House for comment.

“In the case of a full-scale war, Brent would likely soar above USD100/bbl, with any potential shut-in of the strait threatening prices of USD150/bbl or more,” Fitch Solutions’ BMI wrote in a note published Wednesday. 

While the probability of a full-scale war remains “relatively low,” the risks of a misstep by either side are now elevated, BMI’s analysts stated.

Although some industry analysts believe that OPEC+ has enough spare capacity to compensate for a disruption in Iranian exports if Israel targets its oil infrastructure, the world’s spare oil capacity remains largely concentrated in the Middle East, especially among the Gulf states, which could be at risk if a larger conflict worsens.

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U.S. crude oil prices rose nearly 2% on Thursday for a third consecutive session of gains, as the market braces for Israel to retaliate against Iran.

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.

U.S. crude oil has gained 5% this week.

Here are Thursday’s energy prices:

• West Texas Intermediate November contract: $71.53 per barrel, up $1.46, or 2.08%. Year to date, U.S. crude oil is nearly flat.
• Brent December contract: $75.29 per barrel, up $1.39, or 1.88%. Year to date, the global benchmark has fallen more than 2%.
• RBOB Gasoline November contract:  $2.0242 per gallon, up 1.93%. Year to date, gasoline has pulled back nearly 4%.
• Natural Gas November contract: $2.0243 per thousand cubic feet, up 1.98%. Year to date, gas has gained more than 16%.

“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.

But 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.”

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

Oil markets are being too complacent given the risk of major supply disruptions in the Middle East, analysts told CNBC on Thursday, with one warning that crude futures could rally to more than $200 a barrel.

It comes amid speculation that Israel could be planning to launch a retaliatory attack on Iran targeting its oil infrastructure — a prospect which would likely deliver a rude awakening to bearish energy market participants.

Iran, which is a member of the Organization of the Petroleum Exporting Countries (OPEC), is a major player in the global oil market. So much so, it is estimated that as much as 4% of the world’s supply could be at risk if Iran’s oil infrastructure becomes a target for Israel.

Speaking to CNBC’s “Street Signs Europe” on Thursday, Bjarne Schieldrop, chief commodities analyst at Swedish bank SEB, said escalating tensions in the Middle East could have dramatic consequences for the market.

“If … you really took out the oil installations in Iran, force down the exports by 2 million barrels, then the next question in the market will be what will happen now in the Strait of Hormuz? That, of course, would add a significant risk premium to oil,” Schieldrop said.

Asked the extent to which oil prices could spike in such a scenario, Schieldrop replied, “If you take out installations in Iran, easily you go to $200-plus.”

Situated between Iran and Oman, the Strait of Hormuz is a narrow but strategically important waterway that links crude producers in the Middle East with key markets across the world.

Oil prices have climbed more than 4% since the start of the week as traders have closely monitored elevated geopolitical risks in the Middle East.

International benchmark Brent crude futures with December expiry traded more than 2.1% higher at $75.50 per barrel on Thursday, while U.S. West Texas Intermediate crude futures stood at $71.75, over 2.3% higher for the session.

Israeli Prime Minister Benjamin Netanyahu on Tuesday pledged to respond with force to Iran’s ballistic missile attack, insisting Tehran would “pay” for what he described as a “big mistake.” His comments came shortly after Iran fired more than 180 ballistic missiles at Israel.

Speaking during a visit to Qatar on Thursday, Iranian President Masoud Pezeshkian said his country was “not in pursuit of war with Israel.” He warned, however, of a forceful response from Tehran to any further Israeli actions.

“It all depends on how the conflict escalates further and I think it goes without saying that Israel is going to retaliate after the latest Iranian attack — and it’s going to happen within, like, five days probably, before the October 7 one-year anniversary,” SEB’s Schieldrop said.

“Is it going to be … a feeble attack, like we saw in April and then all quieting down? Or is it going to be a more violent attack going after military installations, potentially nuclear installations and oil installations are also on the table. This is what is bugging the market at the moment,” he added.

“I do think, from an oil market point of view, the market is so complacent right now,” Amrita Sen, founder and director of research at Energy Aspects, told CNBC’s “Squawk Box Europe” on Thursday.

“And look, since 2019, since Abqaiq, geopolitical risks haven’t resulted in oil supply losses.

She said that since 2019 — when Saudi Arabia shut down half its oil production a drone attack on its Abqaiq oil processing facility — geopolitical risks haven’t actually resulted in supply losses.

“That’s why the market is jaded,” she continued. “It was Abqaiq, it was Russia-Ukraine, but I do think this is a little bit different.”

The 2019 attack by Yemen’s Houthi rebels on Saudi Aramco facilities prompted a sharp rally in oil prices at the time.

Asked about the prospect of Israel launching retaliatory strikes on Iran’s energy infrastructure, Sen said the U.S. was likely to be unequivocal in its diplomatic messages to the Jewish state.

“That is definitely something every side is talking about, right? The U.S. is involved in this. I don’t think we can forget the fact that we have U.S. elections coming up in days, so I think the message from them very clearly is do not hit energy infrastructure. Equally, do not hit the nuclear facilities,” Sen said.

Meanwhile, John Evans, analyst at oil broker PVM, said in a research note published Thursday that historically, oil prices would have shown a “very different and violent reaction” to missile strikes and bombings in multiple countries in the Middle East.”

“Needless to say, anything around Israel pulls on historical impassioned attitudes, but in oil terms, the involvement of the more influential Iran ought to bring favour for bulls,” Evans said.

“Expansion of war and its damage will need to be proven before oil market participants will shake off the over-riding presence of scepticism,” he added.