Oil traders are closely watching escalating tensions in the Red Sea after an Iranian warship entered the waterway on Monday, according to a Tasnim news agency. U.S. West Texas Intermediate crude traded as high as $73.64 per barrel before paring gains.

Lipow Oil Associates President Andrew Lipow sees oil prices heading higher in the near term, telling Yahoo Finance Live he expects prices to rise above $80 per barrel.

"A year from now we'll be looking at $85 to $87 a barrel, but in between now and then we could see oil prices fall to below $67 a barrel based on Chinese demand," Lipow said. "On the other hand, we could see prices reach $93-$95 a barrel if there were to be supply disruption in the middle east."

Click here to watch the full interview on the Yahoo Finance YouTube page or you can watch this full episode of Yahoo Finance Live here.

Video Transcript

[AUDIO LOGO]

SEANA SMITH: Let's take a look at oil here, oil prices on the move with crude just around 71 bucks a barrel. Now, this move here in crude and why we're taking a look at Brent, as well comes as tensions escalate in the Middle East, Iran sending a warship into the Red Sea after the US destroyed Three Houthi rebel ships killing 10 militants over the weekend. This is all according to multiple reports.

So as the situation continues to escalate, can we expect more volatility for oil? We want to bring in Andy Lipow. He's the president of Lipow Oil Associates. Andy, it's great to have you here. So we are seeing crude, we did see a move higher in earlier trading now just around 71 bucks a barrel. But as we do see tensions escalate here in the Red Sea, how do you see that impacting oil at least in the short term?

ANDREW LIPOW: Well, good morning and thank you for having me. In the near term, the bias for oil prices is going to be on the upside. I should point out that since Hamas invaded Israel, we have yet to see any oil supply disruption. But as tension rises, the market is increasing the probability that a mistake might be made that results in a supply disruption, whether it's through the Red Sea transit lanes or through the Strait of Hormuz.

SEANA SMITH: Well, I'm curious then Andy, which geopolitical tension is the most concerning for President Biden right now when it comes specifically to the impact it has on the price of oil. Is it what we're seeing in the Red Sea? Is it the climate change impact that we're seeing in the Panama Canal? Which one has the biggest potential to keep President Biden up at night given the impact it could have on the price of oil?

ANDREW LIPOW: Well, President Biden is in a dilemma because on the one hand, the administration is focused on gasoline prices and on the other hand, he wants to keep oil supplies flowing in order to tamp down the price of crude oil, which means that geopolitically, this is all wrapped up actually between the Middle East, Iran, Venezuela, and Russia. And he's got to be playing all of those issues at the same time.

Of course, Iran is backing Hamas, Hezbollah, and the Houthi rebels, and we, of course, have Iran aligned with Russia. So you can see how all of these issues are inextricably linked together causing the Biden administration a number of sleepless nights.

SEANA SMITH: So Andy, you said the bias here is to the upside. We're at 71 bucks a barrel, just above 71 bucks a barrel today. How much higher are we headed?

ANDREW LIPOW: Well, I think a year from now, we're going to be looking at $85 to $87 a barrel, but in between now and then, we could see oil prices fall to below $67 a barrel based on Chinese demand and, on the other hand, we could see them reach $93 to $95 a barrel if there were to be a supply disruption in the Middle East.