The En-Pro Blog

In typical fashion, the markets are in panic mode, reacting emotionally and WTI crude prices are trading at noon EST around $100.50U.S./barrel, down about $2.00U.S./barrel. Japan is the third largest world economy, and depending on the extent of the devastation, at this time, it is difficult to assess the short term impacts to recovery.

This event will certainly impact energy demands, injecting more uncertainty and volatility into these already jittery markets.

For the last six weeks, the energy markets have been on edge, held hostage by the events unfolding in North Africa and the Middle East. To have fun and test your geographic knowledge of the “revolution zone,” I have included a website for your review. Locating countries in this region is harder than you may think.

It is estimated Libya is presently shipping about 30% (500,000 barrels/day) of their usual crude exports, but for now others are making up the shortfall. There continues to be no supply issues but tensions remain red hot in Algeria, Bahrain, Iran, Kuwait, Yemen, Egypt, Jordon and now Saudi Arabia. These are real threats to future supply if they become reality, so for now NYMEX traders are adding a risk of supply disruption premium of approximately$20U.S./barrel. Saudi Arabia is OPEC’s largest producer, supplying 9.0 million barrels/day and if the announced March 11th and 20th “Day of Rage” protests spiral into major turmoil and revolutionary cries for social change, the sky is the limit on where crude prices will go.

In our opinion, the possibility of a Saudi revolution happening is remote. This is based on the Saudi’s proactive and engaged approach, which we have discussed in previous reports and they will retain civil content and stability.

By: Roger McKnight, Senior Petroleum Analyst

How will the North American markets be affected? And what about the situation in Europe? Check out this week’s Energy Report. For subscription rates email us at info@en-pro.com.