Senior Israeli officials said this week that their military campaign against Iran could trigger the fall of the regime, an event that would have enormous implications for the global oil market.

The oil market has reacted with remarkable restraint as Israel has bombed the third-largest crude producer in OPEC for eight straight days, with no clear sign the conflict will end anytime soon.

Oil prices are up about 10% since Israel launched its attack on Iran a week ago, but with oil supplies so far undisturbed, both U.S. crude oil and the global benchmark Brent remain below $80 per barrel.

Rising risk

Still, the risk of a supply disruption that triggers a big spike in prices is growing the longer the conflict rages on, according to energy analysts.

President Donald Trump has threatened the life of Iran’s supreme leader Ayatollah Ali Khamenei and is considering helping Israel destroy the Islamic Republic’s nuclear program. For its part, Iran’s leadership is more likely to target regional oil facilities if it feels its very existence is at stake, the analysts said.

Israel’s primary aim is to degrade Iran’s nuclear program, said Scott Modell, CEO of the consulting firm Rapidan Energy Group. But Jerusalem also appears to have a secondary goal of damaging Iran’s security establishment to such an extent that the country’s domestic opposition can rise up against the regime, Modell said.

“They’re not calling it regime change from without, they’re calling it regime change from within,” said Modell, a former CIA officer and Iran expert who served in the Middle East.

Official denial

Prime Minister Benjamin Netanyahu denies that regime change is Israel’s official goal, telling a public broadcaster on Thursday that domestic governance is an internal Iranian decision. But the prime minister ascknowledged Khamenei’s regime could fall as a consequence of the conflict.

Defense Minister Israel Katz on Friday ordered Israel’s military to intensify strikes on Iran with a goal to “destabilize the regime” by attacking the “foundations of its power.” Israel reportedly sought to kill Khamenei in the opening days of its campaign, but Trump vetoed the plan.

There are no signs that the regime in Iran is on the verge of collapse, Modell said.

But further political destabilization in Iran “could lead to significantly higher oil prices sustained over extended periods,” said Natasha Kaneva, head of global commodities research at JPMorgan, in a note to clients this week.

There have been eight cases of regime change in major oil producing countries since 1979, according to JPMorgan. Oil prices spiked 76% on average at their peak in the wake of these changes, before pulling back to stabilize at a price about 30% higher compared to pre-crisis levels, according to the bank.

For example, oil prices nearly tripled from mid-1979 to mid-1980 after the Iranian revolution deposed the Shah and brought the Islamic Republic to power, according to JPMorgan. That triggered a worldwide economic recession.

More recently, the revolution in Libya that overthrew Muammar Gaddafi jolted oil prices from $93 per barrel in January 2011 to $130 per barrel by April that year, according to JPMorgan. That price spike coincided with the European debt crisis and nearly caused a global recession, according to the bank.

Bigger than Libya

Regime change in Iran would have a much bigger impact on the global oil market than the 2011 revolution in Libya because Iran is far bigger producer, Modell said.

“We would need to see some strong indicators that the state is coming to a halt, that regime change is starting to look real before the market would really start pricing in three plus million barrels a day going offline,” Modell said.

If the regime in Iran believes it is facing an existential crisis, it could use its stockpile of short-range missiles to target energy facilities in the region and oil tankers in the Persian Gulf, said Helima Croft, head of global commodity strategy at RBC Capital Markets.

Tehran could also try to mine the Strait of Hormuz, the narrow body of water between Iran and Oman through which about 20% of the world’s oil flows, Croft said.

“We’re already getting reports that Iran is jamming ship transponders very, very aggressively,” Croft told CNBC’s “Fast Money” on Wednesday. QatarEnergy and the Greek Shipping Ministry have already warned their vessels to avoid the strait as much as possible, Croft said.

“These are not calm waters even though we have not had missiles flying in the straits,” she said.

Greater than even odds

Rapidan sees a 70% chance the U.S. will join Israeli airstrikes against Iran’s nuclear facilities. Oil prices would probably rally $4 to $6 per barrel if Iran’s key uranium enrichment facility at Fordow is hit, Modell said. Iran will likely respond in a limited fashion to ensure the regime’s survival, he said.

But there is also a 30% risk of Iran disrupting energy supplies by retaliating against infrastructure in the Gulf or vessels in the Strait of Hormuz, according to Rapidan. Oil prices could surge above $100 per barrel if Iran fully mobilizes to disrupt shipping in the strait, according to the firm.

“They could disrupt, in our view, shipping through Hormuz by a lot longer than the market thinks,” said Bob Bob McNally, Rapidan’s founder and former energy advisor to President George W. Bush.

Shipping could be interrupted for weeks or months, McNally said, rather than the oil market’s view that the United States Fifth Fleet, based in Bahrain, would resolve the situation in hours or days.

“It would not be a cakewalk,” he said.

Electricity prices are rising quickly for U.S. households, even as overall inflation has cooled.

Electricity prices rose 4.5% in the past year, according to the consumer price index for May 2025 — nearly double the inflation rate for all goods and services.

The U.S. Energy Information Administration estimated in May that retail electricity prices would outpace inflation through 2026. Prices have already risen faster than the broad inflation rate since 2022, it said.

“It’s a pretty simple story: It’s a story of supply and demand,” said David Hill, executive vice president of energy at the Bipartisan Policy Center and former general counsel at the U.S. Energy Department.

There are many contributing factors, economists and energy experts said.

At a high level, the growth in electricity demand and deactivation of power-generating facilities are outstripping the pace at which new electricity generation is being added to the electric grid, Hill said.

U.S. consumers spent an average of about $1,760 on electricity in 2023, according to the EIA, which cited federal data from the Bureau of Labor Statistics.

Of course, cost can vary widely based on where consumers live and their electricity consumption. The average U.S. household paid about 17 cents per kilowatt-hour of electricity in March 2025 — but ranged from a low of about 11 cents per kWh in North Dakota to about 41 cents per kWh in Hawaii, according to EIA data.

Households in certain geographies will see their electric bills rise faster than those in others, experts said.

Residential electricity prices in the Pacific, Middle Atlantic and New England regions — areas where consumers already pay much more per kilowatt-hour for electricity — could increase more than the national average, according to the EIA.

“Electricity prices are regionally determined, not globally determined like oil prices,” said Joe Seydl, a senior markets economist at J.P. Morgan Private Bank.

The EIA expects average retail electricity prices to increase 13% from 2022 through 2025.

That means the average household’s annual electricity bill could rise about $219 in 2025 relative to 2022, to about $1,902 from $1,683, according to a CNBC analysis of federal data. That assumes their usage is unchanged.

But prices for Pacific area households will rise 26% over that period, to more than 21 cents per kilowatt-hour, EIA estimates. Meanwhile, households in the West North Central region will see prices increase 8% in that period, to almost 11 cents per kWh.

However, certain electricity trends are happening nationwide, not just regionally, experts said.

Electricity demand growth was “minimal” in recent decades due to increases in energy efficiency, according to Jennifer Curran, senior vice president of planning and operations at Midcontinent Independent System Operator, who testified at a House energy hearing in March. (MISO, a regional electric-grid operator, serves 45 million people across 15 states.)

Meanwhile, U.S. “electrification” swelled via use of electronic devices, smart-home products and electric vehicles, Curran said.

Now, demand is poised to surge in coming years, and data centers are a major contributor, experts said.

Data centers are vast warehouses of computer servers and other IT equipment that power cloud computing, artificial intelligence and other tech applications.

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Data center electricity use tripled to 176 Terawatt-hours in the decade through 2023, according to the U.S. Energy Department. Use is projected to double or triple by 2028, the agency said.

Data centers are expected to consume up to 12% of total U.S. electricity by 2028, up from 4.4% in 2023, the Energy Department said.

They’re “energy hungry,” Curran said. Demand growth has been “unexpected” and largely due to support for artificial intelligence, she said.

The U.S. economy is set to consume more electricity in 2030 for processing data than for manufacturing all energy-intensive goods combined, including aluminum, steel, cement and chemicals, according to the International Energy Agency.

Continued electrification among businesses and households is expected to raise electricity demand, too, experts said.  

The U.S. has moved away from fossil fuels like coal, oil and natural gas to reduce planet-warming greenhouse-gas emissions.

For example, more households may use electric vehicles rather than gasoline-powered cars or electric heat pumps versus a gas furnace — which are more efficient technologies but raise overall demand on the electric grid, experts said.

Population growth and cryptocurrency mining, another power-intensive activity, are also contributors, said BPC’s Hill.