Libya and Rest of the Middle East crisis May Push Oil Beyond report Levels

The pro-democracy revolution in Egypt had only a diminutive impact on the markets, given its tiny role as an oil exporter. From the transport point of view as well, Suez Canal has allowed the traffic (>5% of total traffic) so far. However, the case of Libya is separate - it the first time since the revolt broke out in Tunisia that the impact of sagging oil supply is being felt.

Overshooting Oil

News From Bahrain

The crude prices in the international shop have already started to feel the heat, almost repeating their 2008 recession rally. On February 25, 2011, U.S. Oil prices touched 3 per barrel, before plunging to the following day. The London Brent for April delivery shot up to 3.91 per barrel on Thursday. The wider concerns review to the cumulative effects of the Jasmine Revolution on the fuel production and supplies. This is particularly true for the already unwell world economy, where most of the nations are still struggling with the aftermath of the sub-prime crisis. Any fresh spike in the fuel prices is likely to give a severe blow to the economic recovery. Meanwhile, the market-watcher haves come up with some rather grim forecasts, expecting a additional rise to 5-0 per barrel in the short-term. If the crisis escalates further, the shop may eye historical highs of around 0 per barrel!

Problem Areas

The fancy why the Jasmine Revolution is so mighty is that it bolsters the coarse request for democracy in a whole of countries, along with some of the Opec members. Tunisia was the first affected nation and the internet helped the stir spread, in a matter of days, to other dictatorial and communist regimes - China, Gabon, Libya, Bahrain, Algeria, Egypt, Morocco, Iran and others. The Governments are working hard at controlling the responsible websites and forums to prevent the protestors from coordinating the movement any further. In Libya, Gaddafi has gone a step ahead, deploying the forces and resorting to state-sponsored violence. The Government quarters have threatened to destroy some key oil wells and other supply lines, a move that may cause irreversible damage to the Libyan economy.

The safe bet Side

The brutal reaction from the Gaddafi-led government has invited attentiveness from the international community. The U.N. Is planning sanctions against the country, while Uk and France may enforce arms embargo. Nato has also taken cognizance in the matter and most of the nations are against Gaddafi. If the international pressure forces the Dictator to quit, peace may ultimately be restored and Libyan oil exports may be resumed. The major economies have already stocked excess fuel to meet contingencies and the other Opec nations are planning to ramp up their domestic production, in case the situation worsens. Further, Libya is a big crude exporter, yet it constitutes less than 1% of the global volumes. The transportation straight through the Suez Canal is also not under any immediate threat.

Though such crisis measures may check the soaring oil for the time being, the volatility will continue unless the revolt reaches its destination, whatever it may be!

Libya and Rest of the Middle East crisis May Push Oil Beyond report Levels

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