Commodities | Feb 24 2011
– Unrest In Middle East boosting oil prices
– ANZ Sees scope for further US$20 per barrel jump if unrest continues
By Chris Shaw
When signs of unrest in Egypt first emerged late last month the oil market began to aggressively price a risk premium into the crude oil market. As ANZ Banking Group notes, this risk premium has seen both Brent Crude and West Texas Intermediate Prices spike by close to US$10 per barrel in recent days.
With the Tunisian and Egyptian governments being overturned concerns of potential political ramifications have grown in other oil producing countries in the region, ANZ noting currently there are protests or incidents occurring in Libya, Yemen, Bahrain, Morocco, Algeria, Kuwait, Iran and Iraq.
At the same time there have been widespread strikes and international oil companies have halted work in those countries affected by the protests. ANZ notes OPEC producers currently account for about 25% of global oil and gas supply daily, so any disruption to major oil supplies could create the first supply shock of the decade.
This is likely to support prices and given how quickly events are playing out in the region, ANZ suggests a further oil price spike of as much as US$20 per barrel cannot be ruled out in coming weeks if the current unrest continues.