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What Do the ‘Two Bens’ Mean for Oil Prices?

Oil could spike and gasoline prices could hit $5 per gallon over the next 30 days if we see more monetary stimulus and instability in the Middle East, analyst David McAlvany told CNBC’s “Closing Bell” on Monday.

David Paul Morris | Bloomberg | Getty Images

“If you look at the macro picture, it’s clearly quite negative for oil — deteriorating growth in China, the euro zone and in the U.S. So from a supply and demand fundamental standpoint, you’ve got a very negative oil picture,” McAlvany said. “But you can’t write off the two X factors – the two Bens, if you will — Ben Bernanke and Benjamin Netanyahu.”

Additional monetary stimulus from Ben Bernanke and the potential for an Israeli strike on Iran to prevent it from securing nuclear weapons could cause a spike in oil prices and mean more pain at the pump for U.S. consumers.

Over the weekend, Israeli Prime Minister Netanyahu said the potential that Iran develops nuclear weapons "dwarfed" most other security threats. That has kept the markets on edge about potential supply disruptions.

According to McAlvany, it’s not just the potential disruptions to Iranian production from Israeli action. “It’s the destabilization of the whole area and it’s the cutting of supplies through the Strait of Hormuz, which is a much bigger deal than the supplies lost from Iran,” the CEO of McAlvany Financial Group said.

Any spike is likely to be only temporary because of the negative fundamentals, however. (Read More: Why More States May See Gas Prices Above $4).

Patrick DeHaan, senior petroleum analyst at Gasbuddy.com, told "Closing Bell" he doesn’t expect a major price spike. “While the Middle East is an ongoing concern, I don’t see any situation that could drive the national average above $5,” DeHaan said.

He noted that the fragile U.S. economy couldn’t tolerate a major oil price shock. “The economy would really fall apart before the price of gas gets to $5 nationally,” he said.

“We’re looking at a long-term trend of lower demand,” DeHaan added, which will keep pressure on oil prices.

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