What's Next For Oil: Banks See Oil Spiking As High As $120; Worst-Case Odds Rise To 17%

One day after JPMorgan published a note calculating that the odds of a "worst case scenario" - one which the bank defined as "the oil price reaction turning exponential rather than linear, with the impact on supply potentially extending beyond a 2.1 mbd reduction in Iranian oil exports" and which could send oil prices as high as $120-$130 per barrel - were about 7%, overnight the bank published an updated note (available to pro subscribers), in which JPMorgan commodity analyst Natasha Kanvea writes that the Israel attack on Iran has more than doubled odds of a worst case scenario (i.e. closure of Straits of Hormuz, and an exponential surge in the price of oil) to 17%. 

As Kaneva explains at the time of her latest note (which was late on Friday), "the geopolitical premium has flared up to $10 above our model-derived fair value of $66, indicating a 17% probability of a worst-case scenario", although it is very likely that by the Monday open this probability will spike once more because whereas in the "initial attack Israel avoided energy targets" that is no longer the case after Israel drones attacked two Iranian gas refineries processing product from Iran's giant South Pars gas field, a clear escalation and demonstration that Israel is now selectively going after Iran's energy infrastructure.