The UK energy crunch vulnerability exposed
“Warnings of a world oil crisis and rationing have been issued since reports were emerging that important oil terminals in Libya have been seized by rebels trying to overthrow the Gaddafi regime.”
Oil experts have warned that further unrest in other countries such as Saudi Arabia could have a catastrophic impact on the world’s economies and possible rationing may be required.
The energy markets cannot accommodate another disruption on top of the problems in Libya which Opec’s spare capacity is already trying to absorb the Libyan shortfall.
The disruption, most acutely felt by Europe, is the first sign that the unrest sweeping through much of the Arab world could precipitate a full scale oil shock and the energy crunch. Spreading political uncertainty, particularly in Libya and Bahrain. Already have oil traders and world governments fearful that disruptions could spread to Saudi Arabia, which accounts for 29% of Opec output.
Although we still see contagion of the unrest to the larger energy suppliers in the Gulf as relatively low, the stakes associated with full scale unrest are now much higher, which creates further risk of increased price forecasts and import shocks occurring.
Stuart Lovatt from Heat my Home says: this turmoil and unrest were yet another warning to the world to reduce its dependence on imported oil. It is the United Kingdom greatest risk to be tethered to these suppliers of oil from these unstable parts of the world. Oil prices have gained 15% in the past four days alone.
All southern Libyan oilfields are in rebel control on Thursday. An engineer with the Sirte oil company said pressure had been put on refinery workers, to stop working immediately. The blockade has prevented 80,000 barrels of oil per day being exported from the Dregga oil fields alone.
Estimates of the large extent of the disruption range from 25% to 75% of the whole country’s output which if continues will leave the UK exposed to an oil crisis and possible rationing.
"Feel the pride."Stuart Lovatt February 25, 2011
Founder of Heat My Home.