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Forget Libya, The Smart Money is Eyeing Developments in Saudi Arabia

The smart money has their eyes on Saudi Arabia. Will the protests there turn ugly?
All the drama seen on the streets, from the unnecessary deaths to Muammar Gadhafi’s rhetoric –  its only importance is to gauge how the Saudi citizenry react.

Reuters called a Saudi oil disruption “unthinkable,” and the WSJ claimed “Saudi Arabia is well-shielded from a full-blown uprising of the kind seen in Libya.”

Think again. This is the world’s second largest oil producer and has promised to fill the gap if Libya totally shuts down. It can’t very well keep such promises if Saudis are involved in their own civil revolt. Remember, even if Libya is totally shut down, there is no supply issue.

But triple digit Oil prices will come fast if the unrest on its two borders spreads inside Saudi Arabia. It has the same problems as Libya and Egypt – autocratic rule and unhappy people. So why should they be immune to the spread of revolt?

The Bahrain Shiite population that is up in arms is in the heart of the Gulf (not North Africa), and quite connected to the Saudi minority… just 15 miles away. The mainstream media keeps telling us something happening to Saudi oil is out of the realm of possibility, but I don’t yet see any basis for such assuredness.

Macro Indicators

A big oil gain was baked in yesterday, and there will be quite a bit of resistance at the big figure of $100, but if you see Saudis taking to the streets like Libya, then Oil prices will definitely make it farther. I used HiddenLevers Macro Ideas page to get some find some highly correlated Oil plays. I found one that is very much industry, and one that is not, just to cover my downside in case everything is hunky dory.

By. Hidden Levers 




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  • Anonymous on February 28 2011 said:
    With all due respect, HL is talking nonsense. Egypt has its eyes on Liya as a source of cheap oil to arrange when Libya comes under Egyptian hegemony, after Egypt has intervened together with 'other powers' to sort that country out.Saudi and Egypt are in cahoots. Abdullah and Mubarak were close buddies, which is why Abdullah took such umbridge at Obamas handling of the Egyptian transition. Saudi and the Gulf have to deal with Shiites and Iran, but given Irans overwhelming influence in Iraq, they may be coming to terms. Why else would the Saudis permit those Iranian ships to visit Jeddah, call on the Iranians to help with Mubarak, and 'persuade' the Egyptians to allow two Iranian naval vessels (1 frigate 1 supply ship) on their way to Syria (Hezbollah) to pass through the Suez unchallenged? Its about power plays and accomodating to reality...
  • Anonymous on February 28 2011 said:
    I think I lost my way a bit in my last comment. I was trying to say that for Egypt Libya is a means to enhancing Egypts power and prestige in N.Africa and to enable her to become a counterweight to Iranian influence in the ME. Not an oppostion to Iran but a balancing force. Saudi has the petrodollars, Iran has the proxy militia influence throughout the ME. Egypt has the military muscle but is presently an oil importer, so resource poor, hungry and relatively underdeveloped for her size of population. Taking Libyan oil and even taking control in some way over Libyan oil production if she became hegemonic in Libya would transfotrm that situation fundamentally. Libyan oil and Suez together would make Egypt a power to be reckoned with, not merely a supplicant to the West. It would increase her importance vis a vis Israel. Libya therfore is fundamental in the emerging scenario.
  • Anonymous on March 10 2011 said:
    Nice post. Its always better to think before investing money in stock market. Investment should be done in share market but with the aim to increase our funds so speculation should not be the mode of investment. Investors should know why they are investing money in any stock.Regards Buzzingstreet
  • Anonymous on September 04 2011 said:
    The effort isn't sitting well with victims who spent the money years ago and who could need help again if another powerful storm hits.It's of little consolation that FEMA says procedural changes since 2005 mean future disaster victims aren't likely to have to deal with large recalls of cash.

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