Middle East woes may push oil to $200/bbl: Platts
In an interview with CNBC- TV18, Vandana Hari of Platts said that if the problems in the Middle East escalate, it could threaten around 25 million barrels per day of oil production that comes out of all those countries in North Africa and the Middle East.
March 18, 2011 / 17:32 IST
In an interview with CNBC- TV18, Vandana Hari of Platts said that if the problems in the Middle East escalate, it could threaten around 25 million barrels per day of oil production that comes out of all those countries in North Africa and the Middle East.
She said that the market is still in a wait and watch mode."If things really go out of control in the Middle East I have see numbers like USD 200 a barrel being quite believable in that scenario," she added.Below is the verbatim transcript of Hari's interview with Udayan Mukherjee and Mitali Mukherjee of CNBC-TV18. Also watch the accompanying video.Q: What is the key risk going into the weekend crude market - is it Libya, is it Bahrain and how bad is it looking there? A: It looks like oil prices are continuing to get uphold in direction. Clearly, whatever is going on in the Middle East and more than what is going on it is a fear of what might happen in the Middle East is exerting an upward pressures on prices. But, equally, some of the bearish sentiment that took hold of the market last week was renewed fears about the sovereign debt in Europe that has not gone. The US economy did not seem to be doing too well. China who was making its next five year plan said that they want a cleaner growth flow which could translate to less consumption from China. So, there were definite concerns on whether oil demand will continue growing the fear at the pace that has been forecast. The latest reaction by oil prices seems to be direct results of United Nations agreeing on a no fly zone on Libya. Even air strikes by some of the collation partners have signed up to enforce the no fly zone - Britain, France, US. I suppose the fear here now is that, is this on going problem in the Middle East this escalate in to something bigger. And if it does could it threaten the round about 25 million barrels per day of oil production that comes out of all those countries in North Africa and the Middle East. We are talking here of nearly 30% of global supply and that is a lot of risk for the market to factor in right now. Q: Because of the increasing sensitivity around the geo-political risk to the supply of crude do you believe that crude would need to see a higher long term average as many analyst in the recent past indicated to us and what would your estimates be on crude?A: There seems to be a little bit of a pause in the markets, while there are concerns over potential threats to the entire crude that comes out of north Africa and the Middle East. The market is not yet quite pricing in a lot of all or most of the 25 million barrels per day. There is a lot of wait and watch going on. In a few hours the Saudi King is going to address people in the kingdom. So, let us see what he has to say perhaps, an effort to try and calm down some of the anxiety that seems to be spreading in the Middle East. It is possible that the situation could remain contained to Tunisia, Egypt and Libya which have already come under the wave of the revolution. In Bahrain also, the situation is worsening. But the other oil producing countries might be able to save themselves from catching this infectious wave. In that case oil might stabilize around the current levels having factored in the loss of the Libyan production which is about 1.6 million barrel per day. But God forbid if things so really go out of control in the middle east I have seen numbers like USD 200 a barrel being quite believable in that scenario. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
