Thursday,03 March 2011
By : Jameel W. Karaki
KUWAIT: Current political unrest and uprisings in the Middle East have shown to drive oil prices to magnificently higher levels over the past weeks. In this regard, speculations of some economists in recent reports have been buzzing about oil prices possibly even reaching a record high of 220 US dollars a barrel.
However, Kamel Al-Harami, an independent oil analyst beleives that speculators are using their reports as tools to manipulate oil prices into rocketing to higher levels and thus creating chaos in oil markets.
Additionly, Economist Ahmad Marafi says that its hard to predict or forcast oil prices since determing the price is no longer a financial issue but a poltical one.
Al- Harami said that "Libya, Algeria and Oman are experiencing political turmoil and what's happening is that oil prices will be taken according to the last four weeks as determinent to the price level," adding that another factor that plays into effect is that speculators are trading in oil. Expecting oil prices to remain between $57 to $90 per barrel excluding speculations, Al-Harami noted that "there people behind this nonsense". However, he stated that if we take all the factors into account, including regional political events and speculations, oil could reach $100 to $120 a barrel.
Al-Harami clarified that it is impossible to reach $220 per barrel unless similar unrest hits Saudi Arabia, otherwise, everything should remain relatively normal since the seasonal demand for oil is going to be less than two or three milion barrels a day.
"It really should be at the $90 a barrel level as 1.5 million barrels a day can easily be replaced by Saudi Arabia and yet there is no need to replace it since the demand on oil would be twice as low," he said.
Economist Ahmad Marafi stated that there are several factors that can drive oil prices higher such as shortage or disruption in oil production and logistics (transportation).
"The uprisings in the Middle East and the political unrest in countries such as Libya creates some fear of facing shortage in oil production. However, it is expected for a short period that Kuwait and Saudi Arabia can increase their oil production to compensate the shortfall of oil supply," he noted.
Marafi explained that forcasting oil prices for the long-run is somehow "vague" since it is no longer related to financial factors but political ones. He pointed out that there is some fear of stumbling oil transport because of unrest in the Bab El-Mandeb Strait, the strait that connects the Red Sea with the Gulf of Aden. Similary, a country with a strategic geographical location like Yemen might face the same risk, due to unrest and pirate activity at sea.
By : Jameel W. Karaki
KUWAIT: Current political unrest and uprisings in the Middle East have shown to drive oil prices to magnificently higher levels over the past weeks. In this regard, speculations of some economists in recent reports have been buzzing about oil prices possibly even reaching a record high of 220 US dollars a barrel.
However, Kamel Al-Harami, an independent oil analyst beleives that speculators are using their reports as tools to manipulate oil prices into rocketing to higher levels and thus creating chaos in oil markets.
Additionly, Economist Ahmad Marafi says that its hard to predict or forcast oil prices since determing the price is no longer a financial issue but a poltical one.
Al- Harami said that "Libya, Algeria and Oman are experiencing political turmoil and what's happening is that oil prices will be taken according to the last four weeks as determinent to the price level," adding that another factor that plays into effect is that speculators are trading in oil. Expecting oil prices to remain between $57 to $90 per barrel excluding speculations, Al-Harami noted that "there people behind this nonsense". However, he stated that if we take all the factors into account, including regional political events and speculations, oil could reach $100 to $120 a barrel.
Al-Harami clarified that it is impossible to reach $220 per barrel unless similar unrest hits Saudi Arabia, otherwise, everything should remain relatively normal since the seasonal demand for oil is going to be less than two or three milion barrels a day.
"It really should be at the $90 a barrel level as 1.5 million barrels a day can easily be replaced by Saudi Arabia and yet there is no need to replace it since the demand on oil would be twice as low," he said.
Economist Ahmad Marafi stated that there are several factors that can drive oil prices higher such as shortage or disruption in oil production and logistics (transportation).
"The uprisings in the Middle East and the political unrest in countries such as Libya creates some fear of facing shortage in oil production. However, it is expected for a short period that Kuwait and Saudi Arabia can increase their oil production to compensate the shortfall of oil supply," he noted.
Marafi explained that forcasting oil prices for the long-run is somehow "vague" since it is no longer related to financial factors but political ones. He pointed out that there is some fear of stumbling oil transport because of unrest in the Bab El-Mandeb Strait, the strait that connects the Red Sea with the Gulf of Aden. Similary, a country with a strategic geographical location like Yemen might face the same risk, due to unrest and pirate activity at sea.
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