Sunday, January 8, 2012

French bank SocGen sees oil moving to as high as $200 with Iranian actions

French bank Societe Generale (SocGen) came out with a new assessment for oil prices now that Europe has bought into the potential of an embargo on Iranian oil, and the possibility of a closure of the Straits of Hormuz.

Previously we heard Pimco's thoughts on the matter of an Iranian escalation with "Pimco's 4 "Iran Invasion" Oil Price Scenarios: From $140 To "Doomsday"", now it is the turn of SocGen's Michael Wittner to take a more nuanced approach adapting to the times, with an analysis of what happens under two scenarios - 1) a full blown EU embargo (which contrary to what some may think is coming far sooner than generally expected), and the logical aftermath: 2) a complete closure of the Straits. The forecast is as follows: 1) "Scenario 1: EU enacts a full ban on 0.6 Mb/d of imports of Iranian crude. In this scenario, we would expect Brent crude prices to surge into the $125-150 range." 2) "Scenario 2: Iran shuts down the Straits of Hormuz, disrupting 15 Mb/d of crude flows. In this scenario, we would expect Brent prices to spike into the $150-200 range for a limited time period." - Zerohedge

For all these years, Americans have been calling for oil independence, and we had more than a decade during the Iraq/Afghanistan war years to do it.  However, because of the Gulf spill, and anti-drilling sentiments of the Obama administration, consumers here and in Europe can expect to pay for the ideological agendas of progressive nutjobs who know nothing of business and economics.

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