Oil May Surge to $220 If Libya, Algeria Halt, Nomura Says (1)
2011-02-23 14:18:55.782 GMT
(Updates with Nomura comments from third paragraph)
By Grant Smith
Feb. 23 (Bloomberg) -- Oil prices may surge to $220 a
barrel if political unrest in North Africa halts exports from
Libya and Algeria, Nomura Holdings Inc. said.
Crude futures rose to their highest in more than two years
in New York today as Libya's violent uprising threatened to
disrupt shipments from Africa's third-biggest supplier. The
commodity surged to $96.39 a barrel in New York, and to $108.42
in London. Libyan leader Muammar Qaddafi vowed to fight a
growing rebellion until his "last drop of blood."
"If Libya and Algeria were to halt oil production
together, prices could peak above $220 a barrel and OPEC spare
capacity will be reduced to 2.1 million barrels a day, similar
to levels seen during the Gulf war and when prices hit $147 in
2008," the Tokyo-based bank said in a note today.
The Organization of Petroleum Exporting Countries has spare
production capacity of about 5 million barrels a day, according
to the International Energy Agency. Saudi Arabian Oil Minister
Ali al-Naimi said yesterday that the organization will boost
output if there is a shortage.
"The closest comparison is the 1990-1991 Gulf War,"
during which OPEC's spare capacity dropped to 1.8 million
barrels a day and prices surged 130 percent in seven months,
Nomura analysts led by Michael Lo in Hong Kong wrote.
Nomura said the $220 prediction may be an underestimate,
as speculative investors trading oil who were not active in the
early 1990s may amplify the price gain in the event of an
export halt.
Algeria produced 1.25 million barrels a day last month,
while Libya pumped 1.59 million a day, according to data
compiled by Bloomberg.
--Editors: Raj Rajendran, Grant Smith
To contact the reporter on this story:
Grant Smith in London at +44-20-7330-7353 or
gsmith52@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss on +44-20-7073-3520 or sev@bloomberg.net
2011-02-23 14:18:55.782 GMT
(Updates with Nomura comments from third paragraph)
By Grant Smith
Feb. 23 (Bloomberg) -- Oil prices may surge to $220 a
barrel if political unrest in North Africa halts exports from
Libya and Algeria, Nomura Holdings Inc. said.
Crude futures rose to their highest in more than two years
in New York today as Libya's violent uprising threatened to
disrupt shipments from Africa's third-biggest supplier. The
commodity surged to $96.39 a barrel in New York, and to $108.42
in London. Libyan leader Muammar Qaddafi vowed to fight a
growing rebellion until his "last drop of blood."
"If Libya and Algeria were to halt oil production
together, prices could peak above $220 a barrel and OPEC spare
capacity will be reduced to 2.1 million barrels a day, similar
to levels seen during the Gulf war and when prices hit $147 in
2008," the Tokyo-based bank said in a note today.
The Organization of Petroleum Exporting Countries has spare
production capacity of about 5 million barrels a day, according
to the International Energy Agency. Saudi Arabian Oil Minister
Ali al-Naimi said yesterday that the organization will boost
output if there is a shortage.
"The closest comparison is the 1990-1991 Gulf War,"
during which OPEC's spare capacity dropped to 1.8 million
barrels a day and prices surged 130 percent in seven months,
Nomura analysts led by Michael Lo in Hong Kong wrote.
Nomura said the $220 prediction may be an underestimate,
as speculative investors trading oil who were not active in the
early 1990s may amplify the price gain in the event of an
export halt.
Algeria produced 1.25 million barrels a day last month,
while Libya pumped 1.59 million a day, according to data
compiled by Bloomberg.
--Editors: Raj Rajendran, Grant Smith
To contact the reporter on this story:
Grant Smith in London at +44-20-7330-7353 or
gsmith52@bloomberg.net
To contact the editor responsible for this story:
Stephen Voss on +44-20-7073-3520 or sev@bloomberg.net
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