Tuesday, March 8, 2011

Oil Prices are Heading Higher as Middle East Troubles are Far From Over

“there’s so much unrest that one can actually sense or imagine unknown nano-particles of rage colliding in mid-air...”  (Source: a private person who screens Middle East media for me and with whom I correspond frequently)
“It ain’t over till its over.” –Yogi Berra
We have no empathy for those who bought into the “head fake” rally last week and sold their energy positions because Venezuela’s Hugo Chavez was their peace broker.  One doesn’t make a peace until at least one of the antagonists has reached the point of exhaustion.  And, usually, the peacemaker needs credibility.  Chavez?  A peacemaker?   Really?    This turmoil hasn’t peaked yet.
The contagion in the Middle East and North Africa (MENA) continues to grow.  In addition, the spread to Sub-Saharan Africa lies ahead, as the media images of social network-induced protest encourage copycats in those countries.  We are now tracking the 20 MENA countries as well as others like Cameroon and Nigeria.
One needs to put this MENA contagion into the millennium old perspective of the Shia-Sunni schism in Islam.  Discussion of that is beyond this short missive.  But we must note that Iran is now the dominant sponsor of Shiite Islam and Saudi Arabia is the keeper of Sunni tradition.  Readers and serious investors are encouraged to study this schism.  Think about it as you think about Catholics vs. Protestants or the War of the Roses.  Put that type of historical enmity into an Islamic setting.  No way is this over.
Stratfor put the Bahrain situation in this context.  “There are negotiations under way between the Shiite-dominated opposition and the Sunni royal family…  If there is to be a negotiated settlement, then the royal family, the al-Khalifas, will have to shed some powers, which means that the Shia are likely to be empowered.  If that happens, that energizes Shia in Kuwait…  And then, of course, Saudi Arabia is next.”
Let’s get to oil prices, financial markets and, lastly, to monetary policy in Europe vs. the United States.
Oil prices are headed higher and maybe much higher as inventory cushions diminish and as markets recognize the quality differences in crude oil.  Sweet Libyan crude cannot be replaced by Saudi crude on a barrel-by-barrel basis.  As Ed Yardeni wrote, “Saudi crude is cruder.”
More Here..


  1. wouldn't be surprised to see nigeria in tumult in coming times, and algeria..even venezuela, 3 big oil importers to US. saudi's..guess kuwait joined the protesting of gov today, iran, so many countries

  2. Not to mention Iraq. Even with a "democracy" established for them, they aren't happy. The reason they aren't happy is because they desire an Islamic Sultan who will hate the west and lead them back into their "glory days" which haven't been experienced since the Ottoman Empire before it came to an end in WWI.

    Some people in the Islamic nations do want "freedom", a large portion do not. Civil War will be the only result. Many Muslims desire peace but there are just as many who follow the anti Zionist doctrine formulated by the Brotherhood and Nazis spanning from the 1930s to the 1950s.

    Our soldiers are doomed. They are never coming home. This is so sad what has become of humanity, with much embarassment on America and Britain, the "defenders of the free world." Let's hope when all hell breaks loose each of our soldiers has food supply, and much ammo for their guns.

    Yeah the MSM was celebrating the 10 cent drop in gas prices today. How awesome! So now it is only 10 cents higher than three weeks ago. Of course this is an immediate success to those dumbed down sluggish minds that have been conditioned by TV to have myopias and ADHD. They will find it reasonable to no longer panic. Another week or two the gas will go up about 20 cents. Then it will drop five cents which will be reason to celebrate and remain calm yet again.

  3. In my opinion Oil Prices will consolidate out between U$100 to US$120 per barrel (NYMEX) for the next 6 months, and then await the impact of QE-II closure in June 2011. If global growth is not as per expectations, then even Middle East turmoil cannot stop oil prices from going down.....we have seen this happen in the past in 1999 and 2008.

    Anyway,if you have time, please visit my blog url: http://petrojobrecruit.blogspot.com/ (Talent War in the Middle East Oil&Gas Industry) which you may like to share with your other Consulting friends/colleagues.

    best regards,

    Vikram Razdan
    United Kingdom


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