Brent oil price closes week near $116 on Middle East fears

5 March 2011 5 March 2011

BonTrade

Brent oil prices end a busy, bullish trading week back near $116 a barrel, while traders and analysts consider a new global oil price shock caused by Middle East and North African unrest, which continues to push up the price of Brent oil futures.

Brent Oil Futures – Closing Price

Brent crude oil futures for April 2011 delivery ended the week’s trading session at $115.78 a barrel on the ICE Futures Exchange at close yesterday evening.

Middle East & African Situation

Several countries in the Middle East and North Africa, including wealthy oil exporting countries are continuing to experience political unrest which continues to destabilise the region, and with it, crude oil supply to the west.

Saudi Arabia Key

Market observers do not expect the giant of the region, Saudi Arabia, to face similar political unrest, which economists have warned would affect global growth, however several demonstrations are now planned in the country later in March.

The Saudi Arabian government is taking no chances with the planned protests and is drafting in up to 10,000 security forces to the north eastern Muslim Shia provinces ahead of mass protests planned next week.

“Saudi Arabia shares many of the risk factors that were present in other Middle East and North Africa sovereigns that have seen political upheaval, in our view. If there were to be political upheaval in Saudi Arabia, a scenario which we currently consider unlikely, the ramifications, both geopolitical as well as geo-economical, could be severe.” commented Credit rating agency Standard & Poor’s.

Oil Price Could Break $150 Plus in 2011

“Any concerns about oil production and the export capacity of Saudi Arabia, which is the world’s largest oil exporter, could lead to a further spike in oil prices. Depending on the nature of such hypothetical events in Saudi Arabia, the oil price could rise beyond historical peak levels and, if sustained, would have a tangible adverse economic impact on oil importers and the global economy.” the agency added.

Brent oil prices hit $147 a barrel in the summer of 2008, and eased back under $100 later in the year as the financial crisis hit the globe.

This time it’s different. Severe political unrest in Saudi Arabia would see oil prices rocket, eclipsing records set three years ago.