Middle East chaos could see oil prices rocket this week

20 February 2011 20 February 2011

BonTrade

Recent uprising’s in several Middle Eastern countries could see the price of crude oil rocket higher this coming week as OPEC’s largest crude exporter, Saudi Arabia could see a political blowout of terrifying proportions, and Bahrain maybe the hotspot to focus on.

Bahrain, Saudi and the US Fleet

The situation in neighbouring Bahrain is a microcosm of what might happen in Saudi Arabia. Don’t let Bahrain’s tiny size mislead you.

The US Fifth Fleet is based in Bahrain, which is attached to Saudi Arabia by a causeway and pro-Iranian Shi’ites who make up 70 percent of the population are seething with rage against the pro-Western king.

The remaining 30 percent of Bahrain’s population are Sunni Muslims, and the bitter Sunni-Shi’ite infighting there could spark a religious civil war which could quickly spread to Saudi Arabia.

Oil Prices could Rocket Higher

Brent oil futures are currently at 2 year highs, however many analysts are now forecasting that any disruption to oil supply out of the Suez Canal could see Brent oil surging to $200 a barrel. Currently oil supply from the canal is running as normal.

But, the situation for Bahrain could have a bigger effect on the oil market.

WTI oil futures are also set to follow Brent’s march higher, and with the spread between both contract’s at well over $10 a barrel, it’s going to be an interesting, and probably a very bullish week ahead for the oil market.