* CERAWeek to address geopolitical tensions and energy

security

* Oil prices near $120 as Middle East war rocks markets

* Iran's closure of Strait of Hormuz disrupts global oil

supply

By Arathy Somasekhar

HOUSTON, March 20 (Reuters) - The world's top energy

executives return to Houston next week as the escalating

U.S.-Israeli war on Iran has become a nightmare for energy

markets, as unprecedented attacks on infrastructure and shipping

disruptions sent global oil prices soaring while governments

scrambled to fight inflation and avoid recessions.

Global oil prices jumped this week, hitting almost $120,

levels not seen since Russia's war on Ukraine disrupted markets

in 2022.

Industry experts and analysts expect prices to remain

elevated long after combat operations end. They say it will take

years for the region to recover from the upheaval caused ​by air

strikes and Iran's virtual closure of the Strait of

Hormuz, conduit for 20% of the world's oil and liquefied natural

gas.

For instance, Qatar said a damaged liquefied natural

gas facility will take years to repair.

At this year's CERAWeek conference, over 10,000 attendees

from more than 80 countries will also focus on Venezuela after

the U.S. captured President Nicolas Maduro in January and eased

sanctions on the South American OPEC member nation in an effort

to kickstart its oil industry and boost investment.

"The geopolitics around energy has never flown as thick and

as fast as it's flowing right now. ... the Gulf situation plus

Venezuela, plus all the knock-on issues around Russia, it really

is an extraordinary moment," said Geoffrey Pyatt, who was

assistant secretary of state for energy resources under former

President Joe Biden and is now a senior managing director at

U.S. consultancy McLarty Associates.

MIDDLE EAST CHAOS

The five-day event, set to begin on Monday, comes as Iran's

effective closure of the Strait of Hormuz has forced Middle

Eastern producers to shut in much of their output. Tehran has

also struck oil and gas targets in the Gulf, after Israel struck

one of its large gas fields this week.

Consuming nations have mostly given up hope that disruptions

would be short-lived. Many refineries and petrochemical

companies, mostly in Asia, have cut runs, shut units or declared

force majeure as the conflict disrupts crude and feedstock

exports from the Middle East.

In the U.S., diesel prices have topped $5 a gallon for the

first time since 2022, as gasoline pump prices have moved toward

$4 a gallon. This has raised the political stakes for President

Donald Trump and his Republican Party ahead of midterm elections

in November.

CERAWeek participants and speakers include U.S. Energy

Secretary Chris Wright, Interior Secretary Doug Burgum,

ministers from OPEC+ members Nigeria and United Arab Emirates,

as well as CEOs of Aramco, Chevron ( CVX ), Shell

, TotalEnergies , and the Abu Dhabi National

Oil Company.

"There has been more upheaval and disruption in markets than

ever before...This is a war that's been brewing for almost half

a century, and the concerns about the Gulf have been prominent

for half a century. But now it's happening," Dan Yergin,

Pulitzer Prize-winning author and vice chairman of CERAWeek

conference organizer S&P Global, said in an interview.

Security and affordability will be the defining words for

CERAWeek, Yergin said, a quick pivot from weeks ago, when Big

Tech and its relationship to the energy industry had been slated

to be the preeminent theme.

"All those producers will look at the world differently, and

countries will look at their degree of dependence differently. I

think there will be a big push for diversified supplies," Yergin

said.

Policymakers worldwide are also now considering proposals to

expand nuclear energy and renewables, grow strategic stockpiles

and increase domestic production in a bid to reduce long-term

dependence on oil and gas imports.

VENEZUELA'S POTENTIAL

A last-minute addition to the official CERAWeek agenda is

Venezuelan opposition leader and Nobel Peace Prize winner Maria

Corina Machado, who is expected to address attendees on Tuesday

afternoon. Her team used the conference last year to present a

detailed energy plan, and investors this year will watch for

signals she might send about efforts by interim President Delcy

Rodriguez to quickly boost production with Washington's help as

she pushes for a restoration of democracy.

"The fact that Maria Machado is addressing CERAWeek is a

really interesting reflection of the still unresolved political

story," said Pyatt.

Dozens of investors have been scouting investment

opportunities to plumb Venezuela's huge crude oil reserves. They

must contend with legal risks, regulatory uncertainty and old

infrastructure that is unusable without significant investment.

U.S. Secretary of Energy Chris Wright said last month from

Caracas he expects a "dramatic increase" in Venezuela's

production in the coming months, yet industry experts generally

expect early expansions to boost output by as much as 500,000

barrels a day in as little as six months from a current 1

million bpd. That increase would be insufficient to offset the

supply disruption from the Iran crisis.

AI AND TEXAS SHALE

The conference will also highlight the role of artificial

intelligence in the energy industry and feature an exhibition

space for start-ups and stalwarts to show off new technology.

Efficiency gains and new technology helped push U.S. crude

oil production to a record 13.6 million barrels per day (bpd)

last year. Yet the recent run-up in prices is unlikely to spur

huge increases in output, unless prices remain elevated for many

months, industry executives and analysts said.

Production from the Permian basin, which straddles West

Texas and southeastern New Mexico, is set to grow by just 10,000

bpd this year to a record 6.6 million bpd, according to the U.S.

Energy Information Administration.

For the U.S. production outlook, "I think it's still status

quo until there's some visibility that this war either ends or

isn't going to end," said Dan Pickering, chief investment

officer for Pickering Energy Partners.

"It's not going to be a tsunami," Pickering added.