The Scenario for $220 Oil
If you think that $97 for crude in West Texas Intermediate or $110 per barrel for Brent Sea crude is getting too high, what would you say about a call for the old super-spike scenario? Forget $150 per barrel… Nomura…
Bloomberg and Reuters have given a highlight to this call. It sounds ludicrous and it is based on a total export halt from both Libya and Algeria has OPEN nations would have a 2.1 million barrel per day deficit against total excess capacity of about 5 million barrels.
The assumption is that production would be hit like it was in the first Gulf War when oil more than doubled in 7 months. The comment that is perhaps even more maddening is that Nomura noted that this $220 prediction may be understated due to fewer speculators and financial traders involved in 1990 to 1991.
What else is there to say? As a reminder, this is an “If-Then” scenario rather than a “It is coming!” scenario. What would that translate to at the pump? $7.00 a gallon, or higher?
JON C. OGG
Contact [email protected] for any questions or corrections.
Jon Ogg has been a financial news analyst since 1997. Mr. Ogg set up one of the first audio squawk box services for traders called TTN, which he sold in 2003. He has previously worked as a licensed broker to some of the top U.S. and E.U. financial institutions, managed capital, and has raised private capital at the seed and venture stage. He has lived in Copenhagen, Denmark, as well as New York and Chicago, and he now lives in Houston, Texas. Jon received a Bachelor of Business Administration in finance at University of Houston in 1992. www.247wallst.com.
