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.
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
