Is Saudi Arabia’s ‘Egypt Moment’ Looming?
By Robert Morley
If it is, oil could hit $500 per barrel.
Will Saudi Arabia’s “day of rage” lead to an Egypt-style revolution? Oil is skyrocketing and unrest in the Middle East continues to grow. If tensions explode, oil prices could reach $500 a barrel. What does the future hold for Saudi Arabia?
Last Thursday, Brent crude rose to almost $120 per barrel – nearing levels that could thrust the global economy back into chaos.
And nowhere is the worry more intense than in Europe. Last week, due to the revolution under way in Libya, crude oil exports from there came to a virtual halt. The anxiety was audible among European leaders. More than one fifth of Italy’s oil comes came from Libya and now may have to be found elsewhere. Sixteen percent of France’s, 12 percent of Spain’s and 8 percent of Germany’s come from – or used to come from – that North African country.
As Joel Hilliker wrote last week: If “Islamists taking over the Suez Canal [and its oil conduits] made Europe nervous, chaos in Libya is giving it apoplexy.”
The Middle East crisis “shows the extreme fragility of the global system,” says Jeremy Leggett, a leader of the UK industry task force on energy security. “People don’t realize how close we are to a potential precipice …. Governments need to draw up emergency plans and get cracking on proactive measures.”
Global spare capacity is at razor-thin margins, and when supply suddenly disappears, it means that somebody goes without. Wars have been fought over such issues.
According to Barclays, the world now faces “lasting unease in the oil markets.” Oil could easily shoot to $220 a barrel if Algeria stops production too, warns Nomura bank’s oil specialist Michael Lo.