Talk about an oil shock.
Nomura’s commodity analysts, led by Michael Lo, are calling for oil at $220 a barrel, ifboth Libya and Algeria were to stop oil production. Oil’s currently around $108.
Here’s the summary:
The closest comparison to the current MENA unrest is the 1990-91 Gulf War. If Libya and Algeria were to halt oil production together, prices could peak above US$220/bbl and OPEC spare capacity will be reduced to 2.1mmbbl/d, similar to levels seen during the Gulf war and when prices hit US$147/bbl in 2008. This could also result in a temporary demand destruction of some 2.0mmbbl/d globally.
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