Friday 4 March 2011

Oil prices at risk if Saudi faces unrest, says analyst

The troubles in Libya have left many worried that global economic recovery could face another blow. Raising oil prices and the threat of neighbouring states being sucked into the political turmoil is a real cause for concern.

Andrew Horstead, Risk Analyst for Utilyx, warned of the knock-on effect: "Any indications that Saudi Arabia is being dragged into the picture will raise immediate alarm bells and will almost certainly mean oil prices soaring further.

He added: "Saudi Arabian oil is crucial to balancing the world's oil markets and produces over 11% of global supply. With the Middle East holding 60% of the world's oil reserves, and with unrest already reported in Iraq, Iran, Oman and Yemen, the possibility of further supply disruptions is a very real threat."

A resolution to the problems in Libya might help calm stuttering economies around the world claimed the analyst: "The real danger here is prolonged civil unrest and disruption to supplies. These factors combined with a substantial run-up in global demand and soaring oil prices could risk seriously destabilising the economic recovery."