Venezuela sees $200 oil if Suez canal closes

Source: Reuters

Oil prices could more than double to $200 per barrel if the Suez Canal closes because of the crisis in Egypt, though there is no sign of that happening at the moment, Venezuela's oil minister said on Friday.

Oil Minister Rafael Ramirez, who is usually hawkish on prices, said OPEC would call an emergency meeting if the canal closed, but he saw no need for such an extraordinary gathering of member states right now despite Egypt's turmoil.

"There is sufficient oil (in the market) and there have been no interruptions, but if they close Suez, that could take the oil price to $200," Ramirez told reporters.

Egyptian unrest in the past days helped drive Brent crude above $100 for the first time since 2008. Prices slipped on Friday after an apparently unfounded TV report that President Hosni Mubarak could be stepping down.



Read more: http://www.reuters.com/article/2011/02/04/venezuela-oil-idUKN0422466520110204

But I doubt it.

Rafael Ramirez has been asked by Chavez to pay up as Chavez tries to recover his popularity (which is way down in the polls) using cash. Ramirez is both the oil minister and PDVSA's president, and he's the go to guy when Chavez needs money in a hurry. But PDVSA is out of cash, hasn't been paying its bills, and its oil production is down, plus a big chunk is now committed to pay back Chinese loans the government used in previous years to prop up the tottering economy.

I give you this background because I think Ramirez is just trying to hype the oil market - he's using a bit of bs to drive the speculators to increase the oil prices. PDVSA sells some of its production on short term contracts, he may have a few million barrels ready to go out for bids, which means teasing the price $10 per barrel can make him a few tens of millions - extra income he gets by issuing statements like this.

But the truth is a bit different. A Suez Canal closure will mean that tankers taking crude from the Gulf to Europe will have to go around Africa. This adds a couple of weeks to the trip, and will delay some arrivals. Europe has emergency stocks for such a contingency, so the actual logistics are OK. The price at the most would go up about $3 a barrel after things settle down and the sheep are flushed out of the futures markets.

So this $200 a barrel comment is pure garbage. I live in Venezuela and I'm watching them as they wiggle back and forth trying to get out of the economic nightmare they have created for themselves with their "socialism of the 21st century", this is just another sign the regime is entering its final phases before it moves to become a communist dictatorship. They are not about to give up power, and evidently they're running out of the petrodollars they were using to buy some support. So from here on, it's down down down for Venezuela.

changes?

it would be prudent for Obama to order an Expeditionary Strike Group to the region so in the case of unrest shutting the canal- we can land marines and secure the canal (and keep it open) until the unrest settles. An ESG can deploy over 2,000 marines with their equipment from ship to shore.

It wouldnt be a pretty scenario but it would be a heck of alot better than $200 oil. Plus i could see international participation in such an action since much of the western world would be affected (even china!)

and cut our need for oil by 25%. Cut the world's hatred for us by half, or at least quit adding more reasons for them to hate us. Free up resources to do more useful things than drone-killing civilians and destroying the infrastructure of other countries. Oh, wait a minute...never mind.

i think the number would be closer to 5% and even that is a very very high estimate. Last time i checked the military used 400,000 barrels a day...while the u.s. in total used 22 million. So how would this really help $200 oil.

At $200 oil our economy will be extremely hurt- avg americans would feel an extreme amount of financial pain. So the U.S. govt will have to do something to quell the pain of its citizens. In this case i could give a damn f*ck if we piss off some guy in egypt- the U.S. govt has to put the interests of its citizens first

anyway your overall plan would do nothing to solve this potential crisis. This is not about hating us but about civil unrest forcing closure of a VITAL international water way.

ohh and how would protecting the suez canal be destroying another countries infrastructure?

Cutting our military in half would stop our bombing the fuck out of Afghanistan, Iraq, Yemen, and whoever else we've bombed or plan to bomb.

And our hundreds of billions of dollars spent annually on the military and the never-ending wars -- could go a *long* way toward offsetting the increased price of oil.

Sorry, but I don't happen to be one of the "average" Americans who would be hurt by our trashed economy. I'm one of the 20% or so "loser" Americans who fell through the trapdoor years ago, have been robbed of my retirement savings, can't sell my home, stupidly believed government statistics and predictions about health care jobs and now have no way to pay the student loans (not to mention get back the 2+ years I've wasted) going back to school to re-educate myself.

:silly:
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Leader continues to swirl around the bowl.

rising wages, increased benefits, the best of public education, outstanding health care and a modern well maintained infrastructure. Thank God for the bankers and corporations that have helped our country to thrive.

take that log out of your eye... it used to be comical but man are you ignorant of the reality here and abroad.

I really enjoyed your yawn. But the Venezuelan economy is in really bad shape. Maybe we live in alternate realities. Or maybe you live in the USA? I live in Venezuela.

could do. Maybe they'd actually have some leverage then.

We should go ahead and invade now.