Map 1: Map of Red Sea
Red Sea is located between Africa & Asia Continents. The exact location is between North Africa & West Asia (Middle East Countries).
All the Middle East countries are major producers of Oil and they supply the crude through Suez Canal which is situated exactly in Egypt. Then this crude transported to European region through Mediterranean Sea which is well connected with Suez Canal.
Map 2: Map of North Africa
In this map I tried to cover only the North African region where all the turmoil is going on in the form of Anarchy or Civil War. In this revolution Suez Canal gets so important because this is the only connection where all the Brent Crude is being transported to European Nations. That is why Brent Crude is boiling.
Last week Crude Inventories were on higher side so the price was restricted to $117 per barrel but I feel now Crude will again continue its rising trend.
Algeria, Libya & Egypt already cut the output which will definitely hamper the crude supply.
Important Points to Consider:
During the seven months of Gulf War, prices jumped 130% as OPEC spare capacity was reduced to 1.8mmbbl/d. Similarly, today, Libya and Algeria halted operations; OPEC spare capacity will also likely be drawn down to 2.1mmbbl/d, which could fuel higher oil prices in the coming one month.
In the Past during 1956-57 there was a huge Suez Crisis which totally distorted the picture of Global Economy and now again things are taking place around “Suez Canal” again, STRANGE but TRUE.
Likely to go Down –
- All the Developed Markets specially Dow Jones
- All the Emerging Markets will continue its downward move
- Commodity prices and inventories specially Base Metals except Agri Commodities
- EURO Currency
Likely to go Up –
- Dollar Currency
- Oil & Natural Gas
Disclaimer: In this article all the opinions and predictions are my personal and it has no relevance and connection with any of the report and views of any broking/equity research company.