Thursday, February 24, 2011

Oil Prices Rising

The price of dated Brent Spot passed $112 per barrel today. Iran Heavy crude price is linked to Brent, selling more than $100 per barrel at current Brent prices. The political uprisings and uncertainties in the Middle East have been pushing up the price of oil in recent days.

The Iranian government will benefit from the price rise. Its ambitious subsidy reform program is highly dependent on cash payouts of nearly $2.4 billion a month to more than 80 percent of the citizens. The high oil prices would enable the government to finance the payouts for months to come. The monthly cash payments and the economic activities resulting from the high oil prices would also act as moderating forces in defusing political tensions that have spread across the region.

1 comment:

Anonymous said...

Libya has declared Force majeure and we will likely see a loss of Libyan output (1+ million bpd).