Andy,
While it is possible for oil to drop below $20 per barrel, I doubt it would stay there for long. I expect oil to stabilize somewhere between $22 and $26 per barrel, more likely at the higher end of that range.
OPEC has become much better at controlling the price, especially over the past 3 years or so. Strategic stockpiling of reserves for emergencies has also helped to lower any possibilities of dramatic price spikes to the upside, say over $60 per barrel.
The collective economies of the oil producing states function best when the price of oil is stable, and in the $22 to $26 range. Coincidentally, that is the precise price range where major western oil producers find their best profits and growth. So, at least to my way of thinking, the price of oil will stabilize, for the short term anyway.
There is always the possibility of rogue states or terrorists trying to disrupt the economies of the western world and the OPEC nations by targeting the oil wells themselves for destruction. They are much easier targets than major cities in the west, and if attacks are successful, the results can be more devastating to the global economy than random violent acts around the world. I believe that the coalition forces are well aware of this possibility, and will take whatever measures are necessary to protect the oil wells that power all of the world.
As far as Putin goes, Russia is now an oil-producing nation. As such they will protect their own interests, whether it be the price of a barrel of oil or from terrorist attacks. I think Putin is safe for now, presuming that some sort of lengthy peace process follows the end of the war in Iraq.
KJC |
