Here are the top risk events facing global oil markets
Oil prices have soared since the start of the year, supported by ongoing OPEC-led supply cuts, escalating fighting in Libya and U.S. sanctions on Iran and Venezuela.
Energy analysts tend to agree that a flurry of intensifying risk indicators in the oil market is a cause for concern.
But, when it comes to identifying potentially the most disruptive risk event, the consensus ends.
As global supply stocks lessen, oil industry experts are agreed that the crude market is becoming ever more sensitive to a sudden or unexpected disruption. However there appears to be little agreement on what the current biggest risk actually is.
Oil prices have soared since the start of the year, supported by ongoing OPEC -led supply cuts, escalating fighting in Libya and U.S. sanctions on Iran and Venezuela .
International benchmark Brent crude and U.S. West Texas Intermediate crude have risen by approximately 30% and 40% respectively since the start of the year.
The primary reason for the run-up is simple: The market is tightening. That means a global oversupply of crude is draining, bringing supply and demand into balance and putting the market at risk of flipping into shortage.
Energy analysts tend to agree that intensifying risk indicators in the oil market is a cause for concern. CNBC rounds up what oil traders and analysts view as potentially the most disruptive event.
Libya unrest
"For me, the current major risk event for the oil market is the unrest in Libya," Stephen Brennock, oil analyst at PVM Oil Associates, told CNBC via email.
"Oil production in the country has yet to be disrupted however I suspect it is a matter of when not if. General Haftar and his eastern Libyan forces are determined to seize Tripoli and with it comes the inevitable risk of supply outages," Brennock said.
Libya's eastern military leader, General Khalifa Haftar, ordered an offensive two weeks ago on Tripoli , which is held by the internationally recognized government, increasing the chaos that has plagued the OPEC nation since 2011.
The ongoing conflict has exacerbated fears that open war could soon break out between the main political factions in a key oil-producing nation.
Iran sanctions
"The market is very constructive, it's fairly tight and we think it's going to be in the $70 range through the second quarter and into the third quarter depending on what happens. And there's a lot of variables between now and then," Edward Morse, the global head of commodities research at Citi Group, told CNBC in Dubai earlier this month .
One variable is whether the President Donald Trump administration will extend sanctions waivers on eight countries importing Iranian oil and he has until May 2 to decide. Morse believes that the focus for the U.S. will be sanctions and Venezuela and this would likely see "kinder" actions on those importing Iranian oil.
Brent traded at around $71.75 on Thursday afternoon, up around 0.2%, while WTI stood at $63.94, around 0.3% higher.
"I would say I am most worried about the role U.S. sanctions will play against Iran… It is the most important issue on the supply side and, of course, an incredibly complex one," Cailin Birch, global economist at The Economist Intelligence Unit (EIU), told CNBC via telephone.
The "unpredictable nature" of U.S. foreign policy means there is a "major risk" the Trump administration will remove waivers against Iran next month, Birch said. On May 2, President Donald Trump must decide whether to extend waivers that allow several countries to import oil from Iran, which is under wide-ranging U.S. economic sanctions.
While the Trump administration has a " maximum pressure " policy towards Iran, the president says he issued waivers to eight countries in November in order to prevent oil prices from soaring. The exemptions are also seen as a way of managing relationships with foreign countries, most of whom oppose Trump's Iran policy.
To be sure, analysts doubt Trump will refuse to extend the waivers , despite administration officials repeatedly invoking the administration's goal of driving Iran's oil exports to zero.
Black swan event
"Expectations are rife that Washington will tighten the sanctions screw on the OPEC nation in line with its ultimate goal of reducing Iran's oil exports to zero. Needless to say, the oil market is currently experiencing a supply deficit and any further reduction in supplies from Libya and Iran would cause the market to overtighten and prices to overshoot," PVM Oil Associates' Brennock said.
"This may turn out to be a black swan event as it would force the OPEC+ alliance to reopen the oil spigots," he added.
OPEC+ refers to the energy alliance between OPEC and non-OPEC members, which is trying to keep 1.2 million barrels per day (b/d) off the market through June, following a collapse in crude prices at the end of 2018.
"When you think about what we've learned over the last year — OPEC has shown its ability to increase production very high, reduce production substantially, so a lot of flexibility there," Jeff Currie, Goldman Sachs' head of commodities research, told CNBC in Dubai earlier this month .
"What have we learned about China? They can stimulate, and they can de-lever. We've seen a big stimulus in January, but de-levering last year. What have we seen with the U.S.? They've gone hawkish and they've gone dovish."
"What that starts to do is take out your tail risk both to the upside as well to the downside," Currie continued. "So, your question is: Where does the risk in the system go? If we think about it, if it's the policymaker swinging policy back and forth, that is where the risk really needs to start to reside, it goes in the sovereign balance sheets ... So, if I look at it, a black swan event, more likely than not it's probably going to come out of one of the sovereigns."
— CNBC's Tom DiChristopher and Natasha Turak contributed to this report.
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