Oil prices have surged over 25% since the onset of the Libyan crisis on February 15th. The geopolitical risks in Middle East region warranted a risk premium to oil prices as protests from Bahrain to Libya increased oil supply uncertainty. Libyan rebels have been marching towards Tripoli with support of the Allied forces. They recently captured the oil port of Ras Lanuf and a resolution of the crisis seems closer.
Also, the risk of unrest spreading to Saudi has been diminished as King Abdullah proposed several economic reforms and Bahrain has stabilized. Couple these factors with a huge surplus of oil in the U.S. and a well-supplied oil market and the logicial conclusion would be an immenint sell-off in oil prices. Thus, I think oil prices will go down to around $90. What do you guys think?
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