Crude Oil Price Update. Unrest in Middle East and the Earthquake in Japan Affecting Market Fundementals-15th March 2011.

Oil prices registered an upward hike on Monday, the 14th of March 2011. At the market closure, Brent was priced at USD $ 112.44 a barrel, WTI was at USD $ 101.19 a barrel, while West Texas Sour, Midlands was at USD $ 96.94 a barrel. This increase was being credited to the prevailing unrest in the Middle East, with Libya engulfed in chaotic fighting between rebels and pro-government forces, and uncertainty looming in other countries in the region, most importantly in Saudi Arabia. Although the protests scheduled in Saudi Arabia last week were fairly muted, there is still speculation regarding an uprising in the kingdom. Uncertainty about the situation in the Middle East, and its future impact on oil supplies is resulting in speculative behavior, which is causing market price to increase.


Furthermore, the earthquake and its resulting tsunami which hit Japan last week shall affect the relationship of supply and demand in the global oil market. Japan is the world’s third largest consumer of crude oil, consuming 5.22 percent of total global crude oil consumption. Six oil refineries have been shut down in the country, and it is expected that when Japanese ports are reopened, there would be a substantial reduction in oil demand. Uncertainty surrounding the impact of the Japanese earthquake on the global economy has also contributed to the oil hike. However, it is believed that if the situation in Saudi Arabia normalizes in the coming weeks, then, oil prices are expected to decline due to fluctuations in global demand.