If you think that $97 for crude in West Texas Intermediate or $110 per barrel for Brent Sea crude is getting too high, what would you say about a call for the old super-spike scenario? Forget $150 per barrel… Nomura has laid out the scenario for a spike of up to $220 per barrel.
Bloomberg and Reuters have given a highlight to this call. It sounds ludicrous and it is based on a total export halt from both Libya and Algeria has OPEN nations would have a 2.1 million barrel per day deficit against total excess capacity of about 5 million barrels.
The assumption is that production would be hit like it was in the first Gulf War when oil more than doubled in 7 months. The comment that is perhaps even more maddening is that Nomura noted that this $220 prediction may be understated due to fewer speculators and financial traders involved in 1990 to 1991.
What else is there to say? As a reminder, this is an “If-Then” scenario rather than a “It is coming!” scenario. What would that translate to at the pump? $7.00 a gallon, or higher?
JON C. OGG
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