Oil Prices Barrelling Upward

Oil prices are approaching $65 per barrel, "reflecting the market's persistent uneasiness about strong demand, tight supplies and a slew of threats to output around the globe".

"Consumption is expected to average more than 84 million barrels a day in 2005, leaving only about 1.5 million barrels a day of spare production capacity that could be called upon in an emergency to offset a prolonged supply disruption."

Additional factors giving the stock market jitters: terrorist attack threats against US embassy in Saudi; Iran's resumption of uranium enrichment; refinery disruptions such as unit shut downs at Sunoco after Philadelphia fire, Valero production cuts, unit shut downs at other refineries; tropical storms that pose potential production disruptions.

Of utmost importance: "traders worried a nuclear stand-off with Iran and possible militant strikes in Saudi Arabia could disrupt crucial Middle East exports.....By far the biggest jolt to the markets has come from the geopolitical front".

Top Oilers in 2004:
Producers -- Saudia Arabia, Russia, US, Iran
Exporters -- Saudi, Russia, Norway, Iran
Consumers -- US, China, Japan, Germany
Importers -- US, Japan, China, Germany

The supply can't keep up with the demand, despite OPEC's recent 300,000 barrel a day increase in production.

Something's gotta give or we're headed for an oil crisis.

One must wonder how potential disruption of tight supplies will affect the UN's stance on imposing sanctions against Iran, the 4th largest oil producer and exporter, as Iran goes nuclear.

-- LynZee