Thursday, February 24, 2011

Is $200 Barrel Oil Coming to the US (5 dollars at the Pump)?

Nomura has a very good piece on the current situation in the Middle East and the risk of oil rising to $200. While Libya is a big player in the region, the ultimate scare would come from any disruption in Saudi output. As you can see they are by far the largest player in the region (click to enlarge):

One of the concerns today is that spare capacity is fairly high. That means OPEC is unlikely to add supply to the market despite the disruptions. This was confirmed by CNBC yesterday who says that OPEC has no intentions of raising supplies:

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