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US Defense Secretary Leon Panetta believes there is a "strong possibility" that Israel will strike Iran's nuclear installations this spring, it was reported today.
That belief, is based on intelligence data gathered by NBC News that was produced by unidentifed military and civilian experts to assess the likelihood of an Israeli attack on Iran; the potential impact on the middle east, the U.S., and the global economy.
Here is an excerpt from that report:
Q: What are the chances Israel attacks Iran?
A: Officials agree the chances for an Israeli attack on Iran are at least 50-50, maybe higher. More than one former official has suggested the possibility is as high as 70 percent, but events can move that higher or lower.
Q: What about oil?
A: The price would spike immediately, going from around $100 a barrel now to “between $200 and pick-a-number,” said one oil trader. How quickly it would revert to lower levels would depend on how quickly the situation stabilized and how and where Iran would respond. An attack on Saudi Arabia, for instance, would place the price target at close to that “pick-a-number” scenario, the trader said.
Even a $25 a barrel increase would have serious consequences for the recoveries in U.S., European and East Asian economies, particularly Japan. “It would be a game changer,” for the U.S. economy and the political season, said a U.S. official.
To read the complete NBC report,click here:
NBC News report assessing potential attack on Iran
There’s no questioning the fact that any attack in the Middle East would certainly send crude oil soaring. But if crude were to spike to $200, and we’re at $100 per barrel now, the industry consensus generally holds that for every $10 increase in crude we typically see about a 25-cent increase in the price at the pump. So if you’re seeing $3.50 a gallon in your local market and Israel attacked today, add $2.50 to that and now we’re looking at $6 gasoline.
However, the NBC report places the timing at ‘April, May or June’. We still believe many U.S. markets will be at $4 or higher by Memorial Day Weekend… so again, if an attack occurs at that time and you add the same $2.50 increase that reflects crude oil at $200 per barrel, then -- as incredible as it sounds-- if Secretary of Defense Panetta's intelligence report is correct, your gasoline would be $6.50 per gallon.