[Graeme]

The Case For $150 Oil… (In 2013)

If you thought the Middle East was a powder keg before, just wait till you see what could be on tap for 2013.

There’s mounting proof that shows the whole region could be headed down a one-way path to disaster. As you’ll see, this could be the short fuse that sends oil to a brand new all-time high.

That said, let’s head where most analysts won’t. Here’s the case for $150 oil, in 2013…

It’s time to head down the wormhole. Today there are a lot of dots that need connecting – and with some new information hitting the street, it presents a specific opportunity.

In particular, this could be the end of the Middle East oil cartel as we know it – and surely, this will have an immense impact on global oil prices.

The story begins in Saudi Arabia.

Saudi, according to the U.S. Energy Information Administration (EIA), holds nearly “one-fifth of the world’s proven oil reserves” and currently sits at the head of the list for oil producing and exporting nations.

As it stands, Saudi is the “friendliest” and most stable of the oil producing nations in the Middle East. With that said, it’s safe to assume as Saudi goes, so follows the rest of the region.

Lately, Saudi’s position as top dog in oil production has come under some scrutiny. You’ve likely seen the reports from the International Energy Agency, Goldman Sachs and more, that predict the U.S. will out-produce Saudi Arabia (this could happen as soon as 2017.)

Regardless of when that forecast pans out, the Saudis and OPEC are starting to feel the heat from increased U.S. production. After all, with more oil coming out of the ground here in the U.S. the demand for Saudi oil heads lower.

Indeed, from the peak in 2003, the U.S. now imports approximately half of what it used to from the Saudis. (Note: that’s a lot of dollars NOT heading east.)

This trend is immediately affecting Saudi and OPEC’s ability to manipulate prices, too. With less demand for their crude, it’s hard to jack prices artificially higher.

Just to clarify, I’m not saying that the U.S. shale boom is going to cause world oil prices to plummet (as you know, I don’t think that’s the case.) But I do believe this unconventional oil boom in North America has shaved a premium off the price per barrel.

This premium, as you’ll see is vitally important to the Saudis.

dailyreckoning

[Plantagenet]

There are a number of factors that could set off a middle east crisis and trigger a short-term oil price spike to $150/bbl or even higher.

Frankly, I'm surprised this hasn't happened already.

[Keith_McClary]

There are a number of factors that could set off a middle east crisis and trigger a short-term oil price spike to $150/bbl or even higher.

Frankly, I'm surprised this hasn't happened already.

What could go wrong?

[Tanada]

Unlike so many people on here I am still optimistic there will not be a major Middle East War in the next 13 months because it is a war where everyone will lose and everybody knows it I think $150.00 is entirely possible without a war.

Two things make it possible, the economy recovered for even a few months and boom the price will shoot back up over $148.00 where it stalled in 2008. Option B, demand exceeds supply due to Peak Oil starting to bite and the price climbs until demand shrinks to meet the new supply level.

Of the two I find Option B more likely, but I have been saying it for four years and it hasn't happened yet. Once all the wrangling is done in D.C. and businesses know what they think the future holds then some of them are going to be spending a lot of money making moves they have been holding off from uncertainty. Nothing makes a business hold its money more than uncertainty, once they are certain how things are trending they will act and money will flow. Who ends up with that money depends on what they think is going to happen, it could be a huge housing boom or it might be a lot of treasury bills being purchased but no clear trend is obvious to me yet.