08/03/2011
Oil may hit $200 if unrest spreads to Saudi Arabia
Brent crude futures could hit $200 a barrel if unrest spreads into Saudi Arabia, Societe Generale said on Monday.
Brent crude has been hovering just below the $119 level, its highest price since the third quarter of 2008, as the unrest in Libya has cost the country a loss of about one million barrels of crude production per day. Societe Generale listed some scenarios that could have an impact on oil prices, with its most extreme scenario showing Brent prices sharply high.
“Geopolitical Scenario 3: Unrest spreads to Saudi Arabia and threatens Saudi crude exports and any remaining spare capacity. Brent price range of $150-$200 a barrel,” it said in its research note.
“In this most extreme, worst-case scenario for the oil markets, serious unrest spreads to Saudi Arabia. In this case, it does not really matter if Libya or any other producers are shut down or not. Saudi is OPEC’s biggest producer and the world’s biggest holder of spare capacity.”
