Brent oil price hangs near $126 a barrel as Middle East tensions continue
The price of Brent crude oil futures hangs near $126 a barrel as tensions in the Middle East continue, boosted by concerns that spare production capacity in the US and Europe maybe insufficient to cover any large scale supply disruptions.
In London, Brent crude oil futures for May 2012 delivery closed Friday’s trading session at $126.04 a barrel on the ICE Futures Exchange, or 2.8 percent higher on the day.
Oil Prices to Go Higher Still
“The market will hold here, or move higher. Iran shows every sign of remaining a source of tension, the struggle in Syria looks like it will be a prolonged stalemate, and the extent to which Saudi can fill the supply shortfall, and for how long, is unknown.” said Christopher Bellew, a senior broker at Jefferies Bache Ltd. in London, who last month correctly predicted Brent’s rise above $120 a barrel.
Brent Oil Price at $130 a Barrel
In December of 2011, Goldman Sachs forecast the price of Brent crude oil at $130 a barrel in 2013, saying crude oil prices will continue to rise in order to slow demand growth, even in a poor economic growth environment.
According to Goldman, crude oil prices will have to move sharply higher in 2012 to respond to the tightness in physical markets, before moving lower to factor in the potential damage from the feared global economic recession.
“We continue to view the crude oil market as navigating between the currently tight physical oil markets and the threat that the European debt crisis could trigger a global economic recession in the near future, which would lead to a sharp drop in oil demand,” analysts said in a note.
Goldman Sachs’s New York-based head of energy research, David Greely updated this forecast on Friday saying “On a 12 month horizon we see Brent prices at $127.50.”
Oil Prices Out of Control
Meanwhile, declining oil production rates at oilfields in OPEC member countries have accelerated precipitously and will continue to worsen, according to analysts at Bank of America Corp.
Adding to the predictions, a recent report from Reuters said that top exporter Saudi Arabia and other Persian Gulf producers say surging oil markets are beyond their control and prices could spike higher unless tensions between the West and Iran subside.
Mr Ali al-Naimi oil minister of Saudi Arabia and Mr Abdullah al Badri OPEC Secretary General are expected to focus on high oil prices in their addresses to the International Energy Forum gathering of oil ministers and executives.
Persian Gulf OPEC oil ministers said that they would prefer to see Brent oil trading at around $100 per barrel, rather than current levels of around $126, that they fear could hurt the global economy and lead to a repeat of a spike and subsequent collapse in oil prices in late 2008.
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