Summary:
There are three types of Iranian targets for Israel to strike, assuming civilian targets are out of bounds: oil and gas infrastructure, nuclear infrastructure, and military/government infrastructure and leadership. There are several reasons not to target the first two, including the U.S. urging not to do so. That leaves the third, which could diminish Iran’s ability to escalate the conflict. Alternatively, Israel could strike a range of targets that are comparatively vulnerable and fall into all three categories. What seems increasingly clear is that the retaliation will not be a symbolic spray of missiles at hardened targets. This could lead to perhaps more damage for Iran to address (and divert resources) than the oil market is expecting. As a result, Israel’s retaliation may be bullish for oil prices, even absent a focused attack on oil.
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