Oil May Surge to $220 If Libya, Algeria Halt, Nomura Says
Nomura Says Oil May Rise to $220
Phil Weymouth/Bloomberg
Nomura Holdings Inc said oil prices may surge to $220 a barrel if production was halted in Libya and Algeria because of spreading unrest in the region.
Nomura Holdings Inc said oil prices may surge to $220 a barrel if production was halted in Libya and Algeria because of spreading unrest in the region. Photographer: Phil Weymouth/Bloomberg
Feb. 23 (Bloomberg) -- U.S. Secretary of State Hillary Clinton, Pacific Investment Management Co.'s Mohamed El-Erian, and Chakib Khelil, former Algerian oil minister, discuss the crisis in Libya and its impact on oil prices and the global economy. This report also includes comments from Muammar Qaddafi, Libya's head of state, Jonathan Barratt of Commodity Broking Services Pty and Fatih Birol of the International Energy Agency. (Source: Bloomberg)
Feb. 23 (Bloomberg) -- Faleh Al-Khayat, former director general of planning at the Iraqi Ministry of Oil, talks about Organization of Petroleum Exporting Countries production amid political upheaval in North Africa and the Middle East. He speaks with Maryam Nemazee on Bloomberg Television's "Countdown." (Source: Bloomberg)
Feb. 23 (Bloomberg) -- Algeria's former oil minister Chakib Khelil discusses the impact of the Libya crisis on output from the Organization of Petroleum Exporting Countries. He talks with Francine Lacqua on Bloomberg Television's "On The Move." (Source: 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.
To contact the reporter on this story: Grant Smith in London at gsmith52@bloomberg.net
To contact the editor responsible for this story: Stephen Voss on sev@bloomberg.net
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