As Tension In Nigeria Worsens, Oil Eyes $50 For Early 2009

By Douglas A. McIntyre Updated Apr 27, 5:01PM EDT · Published Dec 30, 8:41AM EST

Follow 24/7 Wall St. on Google

This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Tx00338coilwellgusherodessatexaspos Drops in consumer and corporate spending are about to compounded by high fuel prices as crude is likely to move to $50 or better early in 2009.

Both sides in the Gaza conflict have indicated that the fighting could go on for weeks, and there is no reason to believe that the dispute between the parties will not stretch into months. The 2006 Lebanon War went on for more than thirty days.

The Middle East conflict and its effect on oil prices is likely to be worsened by a looming military conflict in Nigeria.

According to Bloomberg, "The arrest of suspected militant leader Sobomabo Jackrich by the Nigerian military may push rebels into retaliating against the government, the Movement for the Emancipation of the Niger Delta group said."

Early in 2008, oil experts said that battles inside the country’s borders have cut "around 17 percent of the West African country’s installed output capacity of around 3 million bpd." Nigeria’s oil reserves rank 10th among the world’s nations, just ahead of the US.

In July, the rebel group said it would escalate attacks on oil facilities if it did not receive substantial payments from the central government.

With two million barrels of oil produced per day, a shutdown of Nigeria’s oil shipments would be a much bigger issue for crude prices than the current Gaza military conflict.

Although it has been less visible than the problems in the Middle East, Venezuela president Hugo Chavez may be working to take control with the entire government, which would put him at odds with a number of powerful opposition parties and could spark a civil conflict.

The next few weeks could set the tone for oil prices which could stretch well into 2009.

Douglas A. McIntyre

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.