A Perfect Oil Storm on the horizon

In the 2005 television docudrama “Oil Storm,” a hurricane that destroys a vital US pipeline, a tanker collision which closes a busy port, terrorist attacks and tension with Saudi Arabia lead to wild speculation, crude oil prices around USD 150 per barrel and an oil crisis that paralyses America.

It’s just fiction, but not far from the truth!
Excessive oil market speculation, uncertainty about future supplies, increasing nationalism by major oil-producing countries, hurricanes and storms, refining capacity problems in the US and around the world, and growing demand, allowed oil to close above USD 80 per barrel for the first time on September 13, 2007.

“It’s convergence of almost a perfect storm where everything that could possibly push oil prices higher has taken place,” Fadel Gheit, a senior energy analyst at Oppenheimer in New York, told New Europe on September 14.

In London, Dr. Fadhil Chalabi, executive director of the Centre for Global Energy Studies, said the main reason for the price hike is that there hasn’t been enough oil in the market to meet world demand. “The stock build-up has been falling continuously, which means that refiners seek more crude to replenish a depleting stock,” he told New Europe on September 14.

He said Organisation of Petroleum Exporting Countries (OPEC), especially Saudi Arabia, have been cutting back their production and this has caused the high prices.

New Europe