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Oil outlook 'subdued' despite rally: RBC expert

Crude oil refining in Russia
Andrey Rudakov/Bloomberg via Getty Images
Crude oil refining in Russia

U.S. crude oil prices rallied nearly 3 percent Tuesday on geopolitical tensions in the Middle East after Turkish fighter jets shot down a Russian warplane.

But over the next year, oil price increases are expected to be more subdued, barring a supply disruption, Helima Croft of RBC Capital Markets told CNBC's "Closing Bell" on Tuesday.

"You're up against a wall of inventory, that is the problem in terms of moving higher," Croft said. "Its a recovery, but not a recovery to prices that can keep many Middle Eastern countries flush. Even at a $58 average, so many of these countries are circling the drain in terms of their finances. "

With the current supply glut, Croft said there's a sense the world can sustain an outage, making markets less sensitive to mounting tensions in the Middle East, even as countries like Turkey, Syria and Tunisia experience unrest.

Still, Croft said the potential for the so-called Islamic State to attack energy facilities in Saudi Arabia is not something to just "shrug off."

"If you have something major in Southern Iraq, something major in the eastern provinces of Saudi — that will take you materially higher," Croft said.