Analysts warn oil could pass $200 on Iran tensions

Wednesday, February 22, 2012
By Paul Martin

by Emma Dunkley
CityWireUK
Feb 21, 2012

The price of Brent Crude oil could surpass $200 (£126) a barrel on the back of rising tensions between Israel and Iran, which would have negative effects on developed economies, according to RMG Wealth Management.

Oil hit a nine-month high yesterday, peaking at around $124, spurred by supply problems in South Sudan, Libya and Yemen as well as the escalating concern over disruption in Iran.

David Man, partner at RMG, said the price of oil is rising again and dramatic increases, as seen last year and 2008,could impact developed economies and spur inflation.

He said: ‘The rising tensions between Israel and Iran are clearly helping push oil prices higher, and although we have no idea of what the probability is of a real escalation here, we suspect that it would cause oil prices to spike above US$150 and maybe to above $200.’

He added Brent is approaching the highs it hit in the wake of the Arab Spring last year, while the trend has been solidly higher since last October. This fuelled inflation which peaked at over 5% last year hitting developed economies, while wages were not rising.

He added: ‘Today a spike in oil prices is probably the greatest risk to markets and so we need to watch the Middle East closer than ever when we make any investment decisions.’

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