Best of the Week
Most Popular
1.US Paving the Way for Massive First Strike on North Korea Nuclear and Missile Infrastructure - Nadeem_Walayat
2.Trump Reset: US War With China, North Korea Nuclear Flashpoint - Video - Nadeem_Walayat
3.Silver Junior Mining Stocks 2017 Q2 Fundamentals - Zeal_LLC
4.Soaring Inflation Plunges UK Economy Into Stagflation, Triggers Government Pay Cap Panic! - Nadeem_Walayat
5.The Bitcoin Blueprint To Your Financial Freedom - Sean Keyes
6.North Korea 'Begging for War', 'Enough is Enough', is a US Nuclear Strike Imminent? - Nadeem_Walayat
7.Bitcoin Hits All-Time High and Smashes Through $5,000 As Gold Shows Continued Strength - Jeff_Berwick
8.2017 is NOT "Just Another Year" for the Stock Market: Here's Why - EWI
9.Gold : The Anatomy of the Bottoming Process - Rambus_Chartology
10.Bitcoin Falls 20% as Mobius and Chinese Regulators Warn - GoldCore
Last 7 days
Catalonia, Kurdistan, Patriotism, Flags and Referendums - 24th Sep 17
Two Key Indicators Show the S&P 500 Becoming the New ‘Cash’ - 24th Sep 17
The Felling of Sheffield's Big Street Trees 2017 - Dobcroft Road - 24th Sep 17
Advantages of Forex Trading - 24th Sep 17
Stocks, Gold, Dollar, Bitcoin Markets Analysis - 23rd Sep 17
How Will We Be Affected by a Series of Rate Hikes? - 23rd Sep 17
Fed Quantitative Tightening Impact on Stocks and Gold - 22nd Sep 17
Bitcoin & Blockchain: All Hype or Part of a Financial Revolution? - 22nd Sep 17
Pensions and Debt Time Bomb In UK: £1 Trillion Crisis Looms - 22nd Sep 17
Will North Korea Boost Gold Prices? Part I - 22nd Sep 17
USDJPY Leads the way for a Resurgent Greenback - 22nd Sep 17
Day Trading Guide for Dummies - 22nd Sep 17
Short-Term Uncertainty, As Stocks Fluctuate Along Record Highs - 21st Sep 17
4 Reasons Gold is Starting to Look Attractive as Cryptocurrencies Falter - 21st Sep 17
Should Liners Invest in Shipping Software Solutions and Benefits of Using Packaged Shipping Software - 21st Sep 17
The 5 Biggest Bubbles In Markets Today - 20th Sep 17
Infographic: The Everything Bubble Is Ready to Pop - 20th Sep 17
Americans Don’t Grasp The Magnitude Of The Looming Pension Tsunami That May Hit Us Within 10 Years - 20th Sep 17
Stock Market Waiting Game... - 20th Sep 17
Precious Metals Sector is on Major Buy Signal - 20th Sep 17
US Equities Destined For Negative Returns In The Next 7 Years - 3 Assets To Invest In Instead - 20th Sep 17
Looking For the Next Big Stock? Look at Design - 20th Sep 17
Self Employed? Understanding Business Insurance - 19th Sep 17
Stock Market Bubble Fortunes - 19th Sep 17
USD/CHF – Verification of Breakout or Further Declines? - 19th Sep 17
Blockchain Tech: Don't Say You Didn't Know - 19th Sep 17
The Fed’s 2% Inflation Target Is Pointless - 19th Sep 17
How To Resolve the Korean Conundrum  - 19th Sep 17
A World Doomed to a Never Ending War - 19th Sep 17
What is Backtesting? And Why You Need Backtesting System? - 19th Sep 17
These Two Articles Debunk The Biggest Financial Nonsense I See In The Media - 18th Sep 17
Bitcoin Price Crash 40% In 3 Days Underlining Gold’s Safe Haven Credentials - 18th Sep 17
The Sum of Risks – Global, Strategic, Political, and Financial - 18th Sep 17
The Netflix Of Canada’s Cannabis Boom - 18th Sep 17
Stock Market Sentiment Speaks: Either You Learn From The Events Of The Past Week, Or You Are Hopeless - 18th Sep 17
SPX 2500 … At Last! - 18th Sep 17
Inflation Lies, Lies and OMG More Lies - 18th Sep 17
How to Choose right Forex Trader? - 18th Sep 17
Who Has Shaped the World the Most? The Dozen Greatest Achievers - 17th Sep 17
Riding the ‘Slide’: Is This What the Next Stocks Bear Market Looks Like? - 17th Sep 17
Gold Up, Markets Fatigued As War Talk Boils Over - 17th Sep 17

Market Oracle FREE Newsletter

3 Videos + 8 Charts = Opportunities You Need to See - Free

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

© 2005-2017 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

Catching a Falling Financial Knife