Best of the Week
Most Popular
1.U.S. Inner City Turmoil and Other Crises: Ron Pauls Predictions for 2015 - Dr_Ron_Paul
2. What’s In Store For Gold Price in 2015? - Ben Kramer-Miller
3.Crude Oil Price Ten Year Forecast to 2025: Importers Set to Receive a $600 Billion Refund - Andrew_Butter
4.Je ne suis pas Charlie - I am not Charlie - Nadeem_Walayat
5.The New Normal for Oil? - Marin_Katusa
6.Will Collapse in Oil Price Cause a Stock Market Crash? - OilPrice.com
7.UK CPI Inflation Smoke and Mirrors Deflation Warning, Inflation Mega-trend is Exponential - Nadeem_Walayat
8.Winter Storms Snow and Wind Tree Damage Dangers, DIY Pruning - Nadeem_Walayat
9.Oil Price Crash and SNP Independent Scotland Economic Collapse Bankruptcy - Nadeem_Walayat
10.U.S. Housing Market Bubble 2.0 Meet the Pin - James_Quinn
Last 5 days
Ron Paul on U.S. Fed, Central Bankers Monetary Psychopaths - 29th Jan 15
Why Microsoft Stock Will Provide Major Investing Returns - 29th Jan 15
Exploring the Clash Within Civilizations - Mind the Gap - 29th Jan 15
Saudi Arabia Changes Kings, But Not its Oil Policy - 29th Jan 15
Crude Oil Price Bulls vs. Resistance Zone - 28th Jan 15
Acceleration Of Events With Rising Chaos – US Dollar Death Foretold - 28th Jan 15
The Fed and ECB Take the West back to when the Rich Owned Everything - 28th Jan 15
Washington's War on Russia - 28th Jan 15
Cyber War Poses Risks To Banks and Deposits - 28th Jan 15
Lies And Deception In Ukraine's Energy Sector - 28th Jan 15
EUR, AUD, GBP USD – Invalidation of Breakdown - 28th Jan 15
“Backup-Camera Envy” Is Driving This Unstoppaple Investment Trend - 28th Jan 15
The Great "inflated" Expectations for Gold, Oil, Commodities -- and Now Stocks - 28th Jan 15
How to Find the Best Offshore Banks - 28th Jan 15
There’s More to the Gold Price Rally Than European Market Fears - 28th Jan 15
Bitcoin Price Tense Days Ahead - 27th Jan 15
The Most Overlooked “Buy” Signal in the Stock Market - 27th Jan 15
Gold's Time Has Come - 27th Jan 15
France America And Religious Terror War - 27th Jan 15
The New Drivers of Europe's Geopolitics - 27th Jan 15
Gold And Silver - Around The FX World In Charts - 27th Jan 15
It’s Not The Greeks Who Failed, It’s The EU - 27th Jan 15
Gold and Silver Stocks Investing Basics - 27th Jan 15
Stock Market Test of Strength - 26th Jan 15
Is the Gold Price Rally Over? - 26th Jan 15
ECB QE Action - Canary’s Alive & Well - 26th Jan 15
Possible Stock Market Pop-n-drop in Store For SPX - 26th Jan 15
Risk of New Debt Crisis After Syriza Victory In Greece - 26th Jan 15
How Eurozone QE Works: A Guide to Draghi's News - 26th Jan 15
Comprehensive Silver Price Chart Analysis - 26th Jan 15
Stock Market More Retracement Expected - 26th Jan 15
Decoding the Gold COTs: Myth vs Reality - 26th Jan 15
Greece Votes for Syriza Hyperinflation - Threatening Euro-zone Collapse or Perpetual Free Lunch - 26th Jan 15
Draghi's "No-growth" QE Money for Stocks, Zilch for the Economy - 25th Jan 15
Unjust and Undeclared Wars - 25th Jan 15
The European Central Bank Commits Monetary Suicide - 25th Jan 15
Stock Market ECB EQE week - 25th Jan 15
Gold And Silver Timing Is Most Important Element - 25th Jan 15
The Best Way to Invest in the Next Alibaba Internet Stock IPO - 25th Jan 15
The Outpatient Surgery Business Rains Cash into Healthcare Stocks - 25th Jan 15
Stock Traders Flock to Gold GLD ETF - 24th Jan 15
10 Reasons Why You Need an Offshore Bank Account - 24th Jan 15
Goldman Sachs Blankfein - Regulation is Like Background Noise - 24th Jan 15
Gold in Euros Surges As ECB To Print Trillion Euros and Greek Election This Sunday - 24th Jan 15
Gold Bear Market Rally or New Bull ? - 24th Jan 15
Euro-zone 'QE already Working' Says IMF Lagarde - 23rd Jan 15
ECB and EU LTRO and QE for Dummies: Or, Make These Trades - 23rd Jan 15
Debt and Deflation: Three Financial Forecasts - There's More Than Falling Prices - 23rd Jan 15
Market Should Not Doubt' Mario Draghi ECB QE - 23rd Jan 15
Francs, Bonds, Barrels, and Bail-Ins - 23rd Jan 15

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

State of US Markets 2015 Report

Attack on Syria Could Trigger Fuel Apocalypse

Politics / Crude Oil Sep 09, 2013 - 10:47 AM GMT

By: Pravda

Politics

In an anticipation of the war in Syria, the global oil market starts to shiver. A barrel of oil has recently jumped up to $115, which, according to experts, is not a limit. Some analysts give quite gloomy forecasts. They authoritatively declare that the world is standing on the verge of gasoline apocalypse.

In the Russian part of the Internet, there is a very popular forecast from U.S. expert Brandon Smith, who considers Syria a spring board for apocalypse that has been planned by the US establishment. His list of 20 looming, pretty grim events, includes those associated with the cost of oil.


According to Smith, in response to U.S. actions against Syria, Iran can close the Strait of Hormuz by sinking several cargo ships at its narrowest point. Such an act would immediately cut the volume of oil transportation by 20 percent. At the same time, the Egyptian Suez Canal will become highly dangerous to navigation too. Oil tankers will thus have to go around the Horn of Africa, increasing the length of the route by two weeks and significantly raising the cost of transportation.

The inevitable export of instability, the experts believes, will trigger a social conflict in Saudi Arabia. As a result, prices on gasoline will increase significantly. Smith predicts a rise in 75-100 percent during two or three months after any type of attack on Syria.

Sounds scary. Brandon Smith is a professional survivalist. His business is to organize local communities to create a network of mutual aid and barter across the United States. Looks very apocalyptic already. Yet, Smith gives his predictions quite accurately.

Less exalted experts agree with Smith's arguments, at least partially. Indeed, Syria does not affect the oil market directly. The peak of oil production in the country was registered about 15 years ago. Since 2011, the export of hydrocarbons has been virtually stopped - the country consumes all it makes. To crown it all, Syria is dangerously close to major oil transportation routes.

The risk for oil transportation routes explains surging oil prices on stock exchanges. Investkafe analyst Gregory Brig predicts further growth of quotations of up to 120-125 dollars per barrel. Some economists believe that the price will reach $150. However, such a rise prices is only possible if the Syrian conflict escalates into a more substantial one, with the participation of other countries in the Middle East, and if the Strait of Hormuz is eventually blocked.

"Syria is not a key player on the oil market. Rather, the market fears destabilization of the geopolitical situation in the Middle East. If Syria accounts for about 2/10 of the world's oil production, the Middle East accounts for 30 percent. Many are concerned that other countries will be involved in the conflict - Iran, Egypt and others. Therefore, prices will rise," said the analyst.

Against the background of the current situation, a rise by 75-100 percent is out of the question, of course. First and foremost, such rapid growth will kill all possible production everywhere - the world economy will not survive. Even the current growth in prices creates serious problems. The majority of experts, recalling 2008, are confident that after a short way up, the oil market will face a serious pullback. Before the crisis of 2008, a barrel of oils cost $147.3, but by the end of the year the price dropped to $35.

Nowadays, experts say, prices will most likely return to the level of one hundred dollars. Despite the version of giant oil reserves found in Syria (about 37 billion tons), which could derail the prices, it most likely goes about shale oil deposits on the shelf. In addition, the Syrian oil is classified as heavy hydrocarbons (like the Russian Urals). Who would want to arrange a small victorious war to get such dubious benefits? The game is not worth the candle, because these huge reserves would have little effect on reducing the cost of oil.

Anyway, as history shows, the actions of the United States in oil-rich regions only lead to complications. This was the case in Libya, where the richest deposit on the African continent is located. A member of Libya's Parliamentary Committee on Energy, Sliman Kajam said that the official production of black gold dropped to 150,000 barrels a day. Prior to the "democratization" of Libya, the daily production was evaluated at 1.5 - 1.7 million barrels a day.

In addition, the level of oil production in such countries as Saudi Arabia and Iraq are getting closer to their peak. In general, the current level of hydrocarbon prices adequately reflects the balance of supplies and production.

Higher oil prices will certainly bring more profit to Russia, but this money will be soaked in the blood of many Syrian citizens. According to many experts, the aggravation of the situation in Syria will make investors move their capitals from emerging markets to developed ones. The losses from the fall of the Russian stock market will outweigh benefits of the rising cost of oil.

Meanwhile, the head of the Duma Committee on Economic Policy, Igor Rudensky, told Pravda.Ru that the situation in Syria would hopefully be resolved peacefully. "Even if something happens, I do not think it will affect the global world oil market. Oil prices having been going up and down during the last five or six years. International events have their influence on the oil market, of course. If the European economy starts growing, for instance, the demand starts growing too, and oil prices rise. If the demand is falling, prices are falling too. Today, any talks about dramatic changes in oil prices are premature. Overall, the situation is quite stable. Now you can see what happens. Everyone says at the G20 summit that the world economy is slowing down, so one needs to look for a way out from the global crisis together. In my opinion, in the next few years, nothing extraordinary will happen."

Ilya Nikonov

Pravda.ru

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Pravda Archive

© 2005-2014 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Free Report - Financial Markets 2014