The U.K. newspaper The Telegraph reports that in Saudi Arabia, up to 10,000 members of the security forces have been drafted into the eastern provinces ahead of mass protests planned for this week. It also informs that King Abdullah is reported to have told neighboring Bahrain that if they do not put down their own ongoing Shia revolt, his own forces will.

The Saudi government has also banned all protests and marches in the kingdom, according to a statement from the Interior Ministry. State-owned television channel al Ekhbariyah says that any attempt to cause public disorder will be prevented by security forces. Remember that on Friday, March 11, activists have planned their first “Day of Rage.”

In the meantime, we see protests in Bahrain between Sunni and majority Shiite Muslims have erupted into sectarian violence for the first time since anti-government demonstrations started some two weeks ago.

Unlike the protest held elsewhere in the Arab world, those in Bahrain are largely built around the competition for power between the Sunni minority and the Shiite majority, who complain of discrimination and lack of opportunity. Protesters say they want the Sunni monarchy to transfer powers to an elected government that is representative of the Gulf state's majority Shiites.

So, no wonder, at least to me, that yesterday, White House Chief of Staff William Daley said on NBC’s “Meet the Press” program: “The issue of the reserve (U.S. Strategic Petroleum Reserve) is one we’re considering … It is something that only is done, has been done, in very rare occasions. There’s a bunch of factors that have to be looked at besides price.”

Concern that the unrest will spread to major oil-producing countries has created uncertainty in the markets. Yes, the Obama administration is considering using the Strategic Petroleum Reserve if rising oil prices threaten the U.S. economy.

I remember when the first oil crisis hit in 1973/1974 the consternation it caused among economists. At that time the debate raged if the oil price rise would be inflationary or deflationary. The answer was disturbingly simple. It was both. It was inflationary of the price level and deflationary of real demand. Food for thought, isn’t it?

So far, I believe that markets are reacting more or less similar to the way they did in early 1973 and, in particular, in 2008, which was the latest oil shock. For now we see oil prices trending sharply higher and the dollar remaining under pressure, which seems to me a completely rational response.

Besides the threat of a squeeze on oil supplies appears limited given the scale of reserves and Saudi’s 4 million barrels per day of “spare capacity,” the continued signs of unrest in the Middle Eastern and North African (MENA) regions as well as the geographical distribution of oil reserves mean that it would be foolish to expect energy prices to subside at any point soon.

If true then, and here I follow the lessons we have learned from the 1973 and 2008 experiences, there will come a point, that could be somewhere in the neighborhood of early summer, when investors will pull away from all but the most defensive of positions leaving the dollar in turn, given its role as a funding currency, to appreciate sharply. The question investors should ask themselves is how to effectively position defensively before the turn around in the dollar finally occurs.

The main concern for investors remains the political for nations that are responsible for more than half of global oil reserves. Therefore, I think, the most rational approach would appear to focus on those nations with high reserves; a healthy export balance and a stable political situation.

Taking these three requisites into account, then Canada and the Canadian dollar should be one of our favorites.

Canada’s oil reserves, including oil sands, are the second largest in the world and stands at 179 billion barrels. Keep in mind that there has been an 89 percent inverse correlation between USD/CAD pair and the price of oil since 2000.

The Canadian dollar has also a proven record as a safe haven currency during times of high oil prices such as the OPEC oil embargo of 1973/74 as well as through the latter stages of 2007 and early 2008.

Besides this, today, the Russian ruble (RUB) should also prove a natural beneficiary of current events given its 60 billion barrels of proven reserves and 7.1 million barrels per day of exports.

Add to this the fact that the Russian central bank has just “widened” the trading band for the ruble (RUB) as part of its anti-inflationary strategy, which should bring the Russian ruble a couple of notches closer to a free float, and you have an ideal situation for the Russian ruble to continue strengthening from here on.

By the way, the Russian ruble (RUB) is now trading at a 26 month high against the EUR/USD basket. Of course the other natural winner of the actual insecurity situation is Norway and its Norwegian krone (NOK) because of its 2.1 million barrels per day of net exports. And last but not least we should also not overlook Brazil that has now 12 barrels of reserves.

Besides all that, there remain all these countries that are exposed to high net oil imports. When we look beyond the U.S., the eurozone and Japan, for which imports when calculated per head are very similar, a number of other major nations remain heavily and even dangerously exposed to higher oil prices.

China for example, remains the second largest net importer with 4.3 million barrels per day while India ranks fifth on the list with 2.2 million barrels per day, South Korea ranks sixth with 2.13 million barrels per day, while Taiwan, Singapore and Thailand rank 12, 13 and 14.

It’s interesting to note that precisely this group of nations was among the earliest that saw a pullback in investor interest in 2007/2008 during the last oil price shock.

Investors could ask themselves if the same could happen again.