The smart money has their eyes on Saudi Arabia. Will the protests there turn ugly?
All the drama seen on the streets, from the unnecessary deaths to Muammar Gadhafi’s rhetoric – its only importance is to gauge how the Saudi citizenry react.
Reuters called a Saudi oil disruption “unthinkable,” and the WSJ claimed “Saudi Arabia is well-shielded from a full-blown uprising of the kind seen in Libya.”
Think again. This is the world’s second largest oil producer and has promised to fill the gap if Libya totally shuts down. It can’t very well keep such promises if Saudis are involved in their own civil revolt. Remember, even if Libya is totally shut down, there is no supply issue.(read more)
'Spike and crash scenario'
Libyan supply could be knocked out for months, according to a report by US investment bank Merrill Lynch.
The Wall Street firm said that as much as 1.2 million barrels-per-day of production may have been shut down already, and that production facilities in the west of the country were prone to attach by government or opposition forces, which would lead to a prolonged output loss.
There remained a substantial risk that oil prices could move sharply higher, undermining the global economic recovery, the research piece warned, and the market only had limited ability to withstand further unrest in the Middle East.
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