Today’s price for a gallon of unleaded in Kitsap County was $3.65, according to AAA. That’s 38 cents higher than a month ago, and 71 cents a gallon more than a year ago. Here’s some of what’s going on in the oil markets:
NEW YORK (AP) — 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 at home,
although smaller in scale than those in nearby countries. Larger
demonstrations in neighboring Bahrain have oil traders fearing the
unrest could spill across the border.
With the entire 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, Barclays analyst Helima Croft said.
The string of 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. But anything is possible. “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 King Abdulla’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 supply for
months. Investment banks said Tuesday 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.
Experts agree that a resolution to that crisis won’t necessarily
stop oil prices from heading higher.
Analyst and oil trader Stephen Schork said the market is waiting
for a sign that the entire region is headed toward a peaceful
outcome that will keep crude exports flowing. “That’s months away,”
he said.
That’s bad news for drivers in the U.S., where the average price
for gasoline has risen about 39 cents per gallon in three weeks,
topping $3.50.
Oil futures did decline Tuesday, after OPEC ministers discussed
whether to ramp up oil production to make up for Libya’s lost
exports.
Benchmark West Texas Intermediate crude for April delivery fell 55
cents $1.64 to $104.893.81 per barrel on Tuesday. In London, Brent
crude dropped $1.78 to $113.26 per barrel on the ICE Futures
exchange.
Libya produced 1.6 million oil barrels per day before fighting
forced companies to evacuate workers. Most of that production is
been shut down.
Saudi Arabia’s oil minister said the kingdom has about 3.5 million
barrels per day of spare capacity that could be brought online.
“Saudi Arabia will continue to reliably meet the world’s petroleum
needs,” minister Ali Naimi said.
Boosting production now might cool off overheated 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 in the oil market is whether the governments
of Saudi Arabia and Iran — OPEC’s No. 2 producer — will be
dramatically affected by the wave of pro-reform 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.
