A single attack on oil at this point could send prices to $90, but it will depend on where it is. The markets will weigh certain geopolitical sentiments more heavily than others. And there is plenty to choose from right now, from the Ukraine-Russia intensification and the very quickly quashed Kazakhstan uprising to the long-running Libyan conflict and the ever-present threat of Houthi missile attacks on Saudi Aramco oil installations.
What would move the needle on oil prices to $90 right now would likely be a clear move by Russia on Ukraine (not just a threatening, ambiguous deployment on the border), or a serious attack on Saudi Aramco’s facilities.
Libya: Instability already priced-in
In Libya, where December 24th presidential elections were postponed, the markets responded mildly to stoppages at the country’s largest oilfield in mid-December, despite the fact that the shut-in was caused by a clash between powerful factions indicative of a conflict that was never resolved and could at any time return to a state of civil war. The latest proposal is to hold elections at the end of January but to start with parliamentary polls and conclude with presidential elections (the opposite of the original plan). As jockeying for control of Libyan oil and revenues continues to intensify until elections are eventually held, we expect additional politically-based outages. While those outages will move the oil price needle, the impact will not be…