Saudis still an oil-price wild card
Top producer may also face unrest
NEW YORK — Beyond the crisis in Libya, what’s making energy markets nervous — and driving up oil prices — is concern about Saudi Arabia.
The world’s largest oil exporter is dealing with protests, too, although smaller than those in nearby countries. Larger demonstrations in neighboring Bahrain have oil traders fearing the unrest could spill across the border.
With the region in upheaval, it would be a mistake to think the Saudis have shielded themselves from the anger that ousted leaders in Egypt and Tunisia, said Helima Croft, a Barclays analyst. The rebellions in North Africa and the Middle East took the world by surprise, forcing a fundamental realignment of the region’s political power.
“You could say, they’re rich, [King] Abdulla’s popular, no problem,’’ Croft said of the Saudis. But “if anyone had asked us in January whether [Egypt’s] Hosni Mubarak would be gone, most of us would have said absolutely not.’’
More than 17,000 Saudis have signed up on a Facebook page calling for a “Day of Rage’’ on Friday, according to Barclays Capital. That’s despite the king’s recent announcement of a $36 billion program for employment, housing, and education.
Saudi Arabia has also increased production to make up for a drop in Libyan exports caused by the uprising in the smaller OPEC nation. Doing so, however, will cut into the country’s surplus for months. Investment banks said the move will put enough pressure on world supplies to keep oil prices at elevated levels this spring.
Oil prices have jumped about $20 per barrel since mid-February, when the Libyan uprising escalated. Specialists say a resolution to that crisis won’t necessarily stop oil prices from heading higher.
One analyst and oil trader, Stephen Schork, said the market is waiting for a sign the region is headed toward a peaceful outcome. “That’s months away,’’ he said.
That’s bad news for drivers in the United States, where the average price for gasoline has risen about 39 cents per gallon in three weeks, topping $3.50.
Oil futures did decline yesterday after OPEC ministers discussed whether to ramp up oil production to make up for Libya’s lost exports.
In London, Brent crude dropped $1.78 to $113.26 per barrel on the ICE Futures exchange.
Libya produced 1.6 million barrels per day before fighting forced companies to evacuate workers. Most of that production is shut down.
Saudi Arabia’s oil minister said the kingdom has about 3.5 million barrels per day of spare capacity. “Saudi Arabia will continue to reliably meet the world’s petroleum needs,’’ Ali Naimi said.
Boosting production might cool energy prices, but experts warn OPEC could weaken its ability to manage global supplies later this year.
Michael Lynch, president of Strategic Energy & Economic Research, said the main concern is whether the governments of Iran, OPEC’s number two producer, and Saudi Arabia will be dramatically affected by the uprisings.
Raising production now “would have a minor calming effect on the market,’’ Lynch said. “Other than that, it’s not going to take us back below $100’’ per barrel.
US gasoline pump prices climbed for the 21st straight day, adding nearly a penny yesterday to $3.517 per gallon. A gallon of regular is 39.7 cents more expensive than a month ago and 76.4 cents higher than a year ago.
In other Nymex trading for April contracts, heating oil lost 5.66 cents at $3.0091 per gallon and gasoline futures gave up 5.62 cents at $2.9477 per gallon. Natural gas lost less than a penny to $3.915 per 1,000 cubic feet.