Oil could briefly spike to $150 per barrel or more if Syria's supporters seek to punish the U.S. and its allies for a military strike against it.
The potential for U.S. intervention in Syria has sent international bench mark Brent crude to a six-month high, and analysts expect prices to continue to head toward $120 a barrel and above—but the ceiling could be much higher if something happens to disrupt global oil supplies. Societe Generale analysts laid out a case for Brent crude, the international benchmark, to spike temporarily to $150 per barrel.
"Our big worry is Iraq. The Sunni vs. Shiite conflict in Syria has a direct parallel in Iraq, and the violence in Iraq has reached levels not seen since 2008," wrote Michael Wittner, the firm's global head of oil research. Iraq's northern pipeline carrying Kirkuk grade crude to Ceyhan, Turkey, has been repeatedly attacked in the last three months and has reduced exports from 350,000 barrels a day to less than 200,000.
Wittner, in an interview, said the $150 spike is not his base case, and he gives it about a 20 percent chance. He expects Brent to move to $120 to $125 on the military intervention.
"It could be Sunnis. It could be Shiites. Bottom line, Iraq has been escalating. My guestimate is it's about a 20 percent chance, it's not a 2 percent or 5 percent. It could happen. I don't think it's likely, and it's not my base case, but I'm not going to be dismissive of it," Wittner said. "I would say there's another $5 to $10 of upside just on worries."
Some analysts believe even U.S. crude, West Texas Intermediate (WTI crude) could get close to the $150 zone. "If oil prices spike on the Syria attack, and surge above $120, the next logical upside target is going to be the 2008 high of $147, which could easily be taken out," said John Kilduff of Again Capital. "It's the retaliation to the retaliation that we have to be worried about."
Oil prices have ramped up sharply since Monday when U.S. officials said the Syrian government was behind chemical attacks on Syrian citizens and it would be held accountable. West Texas Intermediate, at a two-year high, is above $109 per barrel, now up about 5 percent in August, and Brent is above $115, up more than 7.5 percent this month. Its all-time high was $148.41, hit in July, 2008.
"I'd be surprised if Brent broke $120 on fear alone," said Trevor Houser, a partner at Rhodium Group who leads the firm's energy and natural resources work. "I wouldn't be surprised if it went to $120 immediately after a strike, and then I think the market would wait and see what kind of reaction that (the attack) elicited. First we're starting at a lower base. If we hadn't had the 2.3 million barrels a day in increased U.S. output over the past few years, baseline prices would be a lot higher. The market would be tighter, and the risk would be greater on the back of that."
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A senior U.S. official tells NBC News that "we're past the point of return" and U.S. airstrikes against Syrian targets appear to be inevitable and "within days." According to military officials, four guided missile destroyers, two U.S. and one British submarines all loaded with Tomahawk cruise missiles are in position, and it would be only a matter of hours after President Barack Obama gives the word for missiles to be in the air.
While analysts point to the possibility of retaliation in the form of terror threats and Hezbollah attacks on Israel, it would be an attack on Saudi Arabia or Iraq that could have the biggest impact on oil prices.
"Our concern is that oil-directed attacks (in Iraq) move south and potentially disrupt the 2 Mb/d of Basrah grade exported through the Basrah port complex on the Persian Gulf. There are signs that the non-oil violence (bombings, etc) may be moving south, and oil-directed attacks may follow. Iran, who is Syria's only state ally in the region (Hezbollah and Russia are Syria's other allies), may choose to stir up such attacks, in order to hurt the economies of the Western countries by causing an oil price spike," Wittner notes.
He also said the price would probably not stay high for long since high prices weaken economies and cool demand. Saudi Arabia would also step up production, and other nations would release crude from their strategic petroleum reserves.
Any price escalation has also been mitigated by the fact that the U.S. has increased oil production, reducing its reliance on imported crude from Africa and the Middle East and allowing that supply to reach other markets in Asia and Europe.
U.S. oil production is at a 20-year high, totaling 7.5 million barrels a day last week, while the U.S. was importing 8.4 million barrels a day, according to fresh Energy Information Administration data Wednesday. The U.S. inventories were higher than expected, with commercial crude oil inventories (excluding the Strategic Petroleum Reserve) increasing by 3 million barrels from the previous week to 362 million barrels, near the upper limit of the average range for this time of year.
Analysts say if there is not a disruptive reaction to a U.S.- led strike, Brent should not go much above $120 and WTI should stay below that level. "It should be episodic. This would have to turn into a region-wide conflagration in order for prices to stay there," said Kilduff. "If rockets start flying into Gaza and into Israel and other things happen, such as an attack on Saudi Arabia, all bets are off. A big worry is that there's an attack on Israel that draws us in further."
Experts say ending President Bashar Assad's regime is not the objective of the U.S. and its allies, as that would leave the country and its weapons in the hands of a loosely knit group of rebels that include al-Qaeda.
"When you look at what the (Obama) administration is looking to do, it's a very limited attack. It's not going to change the situation in the region right now. The really big issues there are Iraq and Libya where you have actual disruptive events going on. Libya is going to see continued instability," said Greg Priddy, director of global oil at Eurasia Group.
Priddy said the loss of oil from Libya and Iraq are significant but not enough to offset the trend of ample global supplies. Iran's exports have also been severely cut due to sanctions against it for its nuclear program. Workers striking Libyan oil facilities are responsible for the continuing lost volume of about 250,000 barrels per day, and Iraqi exports are down due to the pipeline attacks. Priddy notes that Saudi Arabia boosted production to 9.8 million barrels per day in July and August.
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He expects any strike on Syria to be narrow enough to avoid major disruptions in the oil market and not to cause a sustained breakout in prices.
Seasonal demand from refineries is dropping off, and at the same time non-OPEC production in increasing, particularly from North America. Priddy noted that non-OPEC production in July rose 570,000 barrels per day from June's level, with North America making up 280,000 barrels per day of that increase.
(Read more: Investors: Be cautious as Syria looms)
Syria is not a major oil producer, and it is not on a major oil route. Societe Generale says Syrian output in the two years since the Arab Spring and the Syrian unrest began, its output has fallen to 50,000 barrels per day from 350,000.
"The fact you have all that new supply coming in means there's a lot more resilience in the system to deal with these smaller type shutdowns, like Libya and Iraq," said Priddy. "I think you would get some headline bump on the actual attack on Syria, but I think that will ebb pretty quickly afterwards as the limited ramifications become apparent."
Paul Christopher, chief international strategist with Wells Fargo Advisors, said the possible U.S. action is not likely to have an impact on the global economy, and he remains positive on the U.S. economy and stock market. "We think probably the uncertainty is worth $5 to $8 a barrel over our target of $105 (for WTI)," he said. He later noted WTI could even reach as high as $115. "It's a trading opportunity perhaps, but we don't think this uncertainty is going to last a long time and what's more it's probably being magnified by other uncertainty."
"I think we're getting less of a pop because it's not sitting on the Suez Canal or the Gulf," he said.
Christopher agrees that retaliation is a factor that could prolong the period of higher prices. He said Iran could lead retaliatory strikes, using proxies in Lebanon, Iraq or from Palestinian territories. "We do not think Iran would seriously threaten oil supply lines for fear of triggering an attack against itself, but retaliation could prolong the uncertainty and keep upward pressure on gold and oil prices and downward pressure on financial markets," he wrote in a note.
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—By CNBC's Patti Domm. Follow her on Twitter @pattidomm.