Weather Report Update: Oil

The latest geo-political tensions in the Middle East, Iran’s missle-firings and possible Israeli flights over Iraq , have helped to jump the recent decline in oil prices to back over $141.00/barrel. These events, coupled with re-invigorated internal conflicts in Nigeria (civil war?) and possible labor problems in Brazil’s oil industry, all combine to emphasize the fragility of world oil production levels and prices.

Note: OPEC ’s Secretary General has indicated that OPEC couldn’t replace Iranian oil production should it be lost to the world’s markets.

NOTE: Should Iran be able to successfully block the Straits of Hormuz , about 40% of the world’s flow of oil would be compromised.

ADDITIONAL MUSINGS:

1. Current oil demand reductions in developed countries like the U.S. appears to be offset, or more than offset, by rising demand for oil in developing countries.
2. Watch oil prices for possible winter heating oil cost concerns.
3. Watch natural gas prices for fertilizer/food cost impacts.