A Force 10x Bigger Than Syria Is Driving Oil Prices Higher
Analysts have been quick to tie the recent rise in oil prices to the Syrian conflict.
But as BI's Rob Wile has been reporting, there are other major short-term forces driving prices.
Arguably the biggest of those non-Syria forces is Libya.
Deutsche Bank's Jim Reid reminds us in his Early Morning Reid note:
Although the attention has been on Syria, our commodities research team highlights that the freefall in Libyan oil production is having a more dramatic and immediate impact on the physical oil market. Indeed, Libya normally produces about 10x more oil than Syria. Libyan oil production has dropped to as little as about 200kbd (from an average of 1.4m bbb/day) as of the most recent reporting period as labour strikes disrupted port operations and consequently crude oil exports. They note that the impact of these supply disruptions particularly in Libya is acute for the Brent balance from both a regional as well as crude oil quality perspective.
For the most part, analysts believe any supply-related price increases will be short-lived as machinery becomes more energy-efficient and consumers shift toward greener alternatives.