Israel-Iran Tension Causing Oil Price Surge, CNBC Analyst Says

      In early trading on June 6, the price of a barrel of oil rose $6 and was holding steady at near-record highs in excess of $133. According to CNBC contributor John Kilduff, a high-ranking Israeli official caused the spike when he commented on tensions between Israel and Iran.


     “[W]hat’s really lit up this market big time here is, which hasn’t been really mentioned. I haven’t heard too much and I’m surprised at, is deputy minister in Israel said this morning that an attack on Iran’s nuclear facilities is quote, ‘unavoidable,’” said Kilduff on CNBC's “Squawk on the Street” June 6. 


     “This is one of Ehud Olmert’s deputies – leading deputies, and Israel having a track record in this area, the market has jumped all over this comment,” he said.


    Kilduff was referring to comments by Israeli Transport Minister Shaul Mofaz published in the Israeli newspaper, Yedioth Ahronoth.


    “If Iran continues with its programme for developing nuclear weapons, we will attack it. The sanctions are ineffective,” Mofaz told the Israeli newspaper, according to a June 6 Reuters article. “Attacking Iran, in order to stop its nuclear plans, will be unavoidable.”


     Kilduff is the vice president of risk management for MF Global (NYSE:MF). In May, Kilduff predicted the price of oil would top out at $138 before retreating.


     “If equities can really come back into favor, a lot of this speculative money will come out of the market,” Kilduff said on the May 7 “The Call.” “And I think one of the key things as well is what happens to China after the Olympics – do they really ratchet down on the growth they’ve gone through and do they raise prices at the pump? You know China’s demand is up 5 percent quarter-on-quarter, year-on-year because they subsidize so much of the price. If they raise their price – that would be a demand killer.”

     Other factors were blamed for this most recent spike including investment bank Morgan Stanley’s (NYSE:MS) forecast that oil would reach $150 a barrel in a month due to Asian demand and a dollar weakened by the Labor Department’s announcement on June 6 that unemployment jumped a half percentage point in May.