Might Oil Imports Be Disrupted?
October 3, 2002
With demand for crude imports falling along with the economic outlook -- and prices declining as well -- it might be thought curious to start contemplating a disruption of supplies from the Organization of Petroleum Exporting Countries. But according to a report by Raymond James & Associates in Houston, there is a substantial chance that might occur if the U.S. targets terrorist organizations linked to producing countries such as Iran and Iraq.
- The financial firm says rising tensions in the Middle East mean there's an 80 percent chance that U.S. oil supplies will be disrupted in the next two years.
- Shorter term, there's a 20 percent to 30 percent chance of interruptions.
- If oil supplies to the U.S. were to fall by 3 million to 4 million barrels a day, crude oil prices could soar to as high as $40 to $50 a barrel.
- To make matters worse, U.S. producers are already pumping all the oil they can, with imports supplying about 60 percent of demand.
Source: Michael J. Mandel, "Economic Trends: Oil: Investors Have It Wrong," Business Week, October 8, 2002.
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