The year 2011 can be characterized thus far as a year of instability in Northern Africa and in the Middle East:
- January featured the ouster of Tunisia’s leader and the collapse of the Lebanese government.
- February featured the ouster of Egypt’s longstanding president, a violent revolt in Libya, a major uprising in Bahrain, and a “Day of Rage” in Iraq.
The month of March could easily be another month of instability in Middle East. In fact, there is potential for the unrest to spread to key oil producing countries of the Persian Gulf in the month of March. The following is a list of Persian Gulf countries that reportedly have anti-government demonstrations scheduled in the month of March and information about how much oil these countries produce:
- Oman (Underway Now): Oman only produces approximately 1.0% of the world’s oil, but is located by the Strait of Hormuz, a key waterway where approximately 20% of the world’s oil travels through.[1]
- Kuwait (March 8): Kuwait produces 2.481 million barrels of oil per day or approximately 3.2% of the world’s oil.[2]
- Saudi Arabia (March 11): Saudi Arabia produces 9.713 million barrels of oil per day or approximately 12% of the world’s oil.[3] Saudi Arabia also possesses most of OPEC’s spare capacity, which is currently being used to make up for the loss of Libyan oil production.
- Qatar (March 16): Qatar produces 1.345 million barrels of oil per day or approximately 1.5% of the world’s oil.[4]
It is important to pay attention to the unrest in these countries because they are key oil producers. The violent unrest in Libya led to oil prices rising by nearly $12 last week even though Libya is only responsible for approximately 1.6% of world’s oil production.[5] If one or more of the countries listed above experience significant instability oil prices could go much higher and lead to an oil price shock. An oil price shock affects everyone…
- The following chart illustrates how the average American is impacted financially by higher oil prices: Link The chart suggests that the average American household pays an extra $390 a year with every $10 increase in the price of oil.
- The following interactive chart illustrates the impact of higher oil prices on the global economy (global GDP) Link The chart shows that a $10 increase in the price of oil results in 0.5% decline in global GDP.
I added a new threaded comments system to the blog over the weekend.
- The new threaded comments system enables you to reply directly to a specific comment or question instead of forcing your response to appear at the bottom of the screen like before. This is very useful when you want to respond to something said in a specific comment. The new threaded comments system also enables you to have a direct discussion with a specific commenter.
- You can still keep your anonymity by posting a comment as a “guest”.
I think the new comments system is much better than the previous system. However, let me know if you like the previous system better. If enough people voice their displeasure with the new system I’ll consider switching to a different comment systems or going back to the previous one.
References
[1] “BP Statistical Review of World Energy”. London: BP Jun 2010. Pg 8
[2] Ibid 8
[3] Ibid 8
[4] Ibid 8
[5] Ibid 8
