Oil traded near a 29-month high in New York after turmoil that cut Libya’s output spread to Oman, raising concern Middle East production may be disrupted further.
Futures had the biggest weekly gain in two years last week as hedge funds raised bullish oil bets amid estimates that Libya’s crude flow was cut by as much as two-thirds. Protestors in Oman were killed in clashes with police yesterday. The turmoil has made crude prices more vulnerable to a “spike-and- crash” scenario, according to Bank of America Merrill Lynch.
“The flash-fire is spreading,” said Thorbjoern Bak Jensen, an analyst at Global Risk Management in Middelfart, Denmark. “The situation in Oman creates speculation the unrest will spread to Saudi Arabia itself, though living standards in Saudi are higher and the country is much richer.”
Saudi Arabia is going to get hit with these revolutions and they are horribly afraid of it, especially since 90% of the oil production comes from the Shia dominated East.
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