London CNN  —  Iran’s unprecedented attack on Israel over the weekend has ratcheted up tensions in the oil-rich Middle East yet again, threatening to send fuel prices skyward if the conflict escalates and disrupts global supplies. Iran launched scores of missiles toward Israel late Saturday in retaliation for a suspected Israeli strike on an Iranian diplomatic complex in Syria on April 1. Israel’s military said that “99%” of the more than 300 projectiles were intercepted. Oil prices spiked Friday to levels not seen since October in anticipation of just such an escalation but on Monday were subdued. Brent, the global benchmark, was trading down 0.9%; West Texas Intermediate futures, the US benchmark, were down 0.8% by 9.25 am ET as markets wait to see how Israel will respond. Pedestrians walk past an electronic board showing a share price of the Nikkei index of the Tokyo Stock Exchange in Tokyo on April 15, 2024. (Photo by Kazuhiro NOGI / AFP) Kazuhiro Nogi/AFP/Getty Images Related article Oil prices dip but gold climbs as Israel weighs response to Iran’s attack Members of Israel’s war cabinet were locked in heated debate over the nature of its response, with military and diplomatic options both being considered, two Israeli officials familiar with the deliberations told CNN. The deepening conflict raises “the risk of increased volatility in oil markets and (provides) a fresh reminder of the importance of oil security,” the Paris-based International Energy Agency, which monitors oil markets on behalf of developed economies, said in a note Monday. Tensions between Israel and its arch-enemy Iran have ratcheted up since October 7, when Palestinian militant group Hamas launched an unprecedented assault on Israel, killing more than 1,200 people. That attack sparked a devastating response from Israel — more than 30,000 people have died since Israel launched its counter-attack on Gaza, the strip of land controlled by Hamas. Israel has long accused Iran of engaging in a form of proxy war by backing groups — including Hamas — that have launched attacks on its shores. Tehran has denied any involvement in the October 7 attacks. The Strait of Hormuz ‘chokepoint’ Iran’s attack raises the possibility that the conflict could disrupt shipping through the Strait of Hormuz, a narrow waterway off the country’s southern border through which more than one quarter of global maritime oil trade — including crude and petroleum products such as gasoline — flows each day. If the conflict escalates further, Iran has the capability to attack oil tankers passing through the strait using drones, missiles or submarines, Simone Tagliapietra, a senior fellow at Brussels-based think tank Bruegel, told CNN. A worst-case scenario would entail a total blockade of the strait by Tehran, he added, though the likelihood of either of these outcomes is currently low. “It is the most significant chokepoint in the global oil market,” Richard Bronze, co-founder and analyst at data firm Energy Aspects, told CNN. “Any significant disruption would have a huge impact on global oil supplies and oil prices as a result.” Iran is a big producer and member of the Organization of the Petroleum Exporting Countries but exports most of its oil to China because of long-standing international sanctions. Still, a reduction in Iranian oil exports would have a “massive” impact on the global market, according to Bronze, as China would be forced to compete with other countries for supplies elsewhere. Iran exports up to 1.5 million barrels a day of crude, Bronze said, equivalent to 1.5% of global oil supply. The country produced a total 3.25 million barrels per day of crude in March, IEA data shows. Disruption or blockages to traffic in the Strait of Hormuz would be a game-changer. “It’s the main or only route for the Middle Eastern oil exporters,” including OPEC members Saudi Arabia, Kuwait and the United Arab Emirates, Bronze said. Still, Bronze sees the “most likely path from here (to be) de-escalation rather than further escalation,” given open calls by Israel’s allies for it to show restraint. Another possibility is that the United States, Israel’s most important ally, retaliates by cracking down again on Iran’s oil exports, according to Tagliapietra. Since Russia’s full-scale invasion of Ukraine in 2022 upended energy markets worldwide, Washington has relaxed enforcement of its sanctions on Iran’s oil to keep global supplies — and prices — of the fuel stable, he said. A renewed crackdown would, however, “create upward pressure on global prices” at an inopportune moment, Tagliapietra said. The US is just months from a presidential election where President Joe Biden’s record on gasoline prices, and inflation in general, will be closely scrutinized. A tight oil market Despite Iran’s barrage of drones and missiles, the conflict had a relatively muted impact on the global oil market Monday. Traders had been anticipating a retaliatory attack by Iran since the bombing of its embassy in Damascus in early April, and expected a tightening of global supplies over the coming months, analysts told CNN. Oil prices have already risen sharply since hitting a low in early February. Brent has climbed more than 16% in that time — closing above $90 a barrel in early April for the first time since October — while WTI has risen nearly 19% to hit $85 a barrel. “The reason that we’re seeing oil prices off a little bit so far today is that those prices had already risen last week in anticipation of an attack (by Iran),” Bronze, at Energy Aspects, said. A seasonal uptick in demand as many countries approach the busy summer months, as well as a roaring US economy and signs of an improving Chinese economy, have provided a tailwind for prices, he added, noting that prolonged export curbs by OPEC+ — OPEC plus allies including Russia — have kept global supplies of crude tight. Still, according to the IEA, output from non-OPEC+ producers, driven by the United States, Brazil, Guyana and Canada, is expected to come close to meeting the global growth in oil demand this year and next. Jeremy Diamond in Tel Aviv contributed to this report.