Tags: Oil | price | crude

Experts to WSJ: Oil Poised to Surge Back to $150

By    |   Tuesday, 20 March 2012 11:32 AM

Some oil experts worry that crude prices could return to 2008’s record high of $147 a barrel, thanks to a shrinking supply of oil in the market and the conflict between Iran and the West.

Oil prices recently stood at $106, so a spike to $147 would represent a 39 percent increase.

Supply now is even more constrained now than during last year’s Libyan civil war, The Wall Street Journal reports. Spare capacity averaged 2.5 million barrels a day in the first two months of this year, down from 3.7 million barrels during the same period of 2011.

The elephant in the room now is the spat with Iran. The west has strengthened sanctions against the rogue nation to prevent it from developing a nuclear weapon. The European Union has even cut off oil imports from Iran.

In response, Iranian officials have threatened to shut down oil shipments from the Persian Gulf, which provides 20 percent of global supplies.

And that has experts worried about a price surge. "This is something everybody is watching for," U.S. deputy energy secretary Daniel Poneman tells The Journal. “Nobody wants to see a reprise of what happened in 2008."

Demand from fast-growing economies in Asia also is boosting crude prices, says HSBC economist Frederic Neumann.

“The region is now the biggest consumer of crude,” he writes in a report obtained by Time magazine. “Global car sales are currently running at a record level, largely thanks to Asian drivers.”

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Tuesday, 20 March 2012 11:32 AM
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