January 29, 2006
Political trouble in Iran and Nigeria could come to a head this week, oil analysts say, resulting in a huge jump in the price of crude. If oil prices rise past $90 a barrel, as some say is possible, U.S. gasoline prices would quickly get back to the record levels they achieved in the weeks following Hurricane Katrina.
Iran is the focal point this week, as the International Atomic Energy Agency meetings on Thursday to decide whether to refer the country to the United Nations Security Council for punitive action for its nuclear program.
Iran has threatened to retaliate against the world by temporarily stopping its oil flow, which amounts to about five percent of the world's supply.
Oil prices closed Friday at $67.76 in New York, and traders say another 20 percent jump is possible if Iran carries through on its threat of a complete shut down. With little supply cushion, nations would quickly bid up the price on world markets.
To make matters more bleak for consumers, Iran is not the only geopolitical crisis that could impact oil prices. There is a growing rebellion in the oil-rich nation of Nigeria, which is also a member of the Organization of Petroleum Exporting Counties. So far, Nigeria has been forced to cut its oil output by 200,000 barrels a day.
Consumers shouldn't expect other OPEC nations to step in and make up the shortfall. While other countries could, in fact, make up much of the difference, there appears little inclination to do so. OPEC President Edmund Daukoru told the Reuters news agency last week OPEC does not see a role for itself in this drama.
