Word: crude
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Ever since the oil embargo of 1973, Western economies have had to live with the fear that precious crude from the Middle East would once again be cut off. Last week, as the war between Iran and Iraq threatened to make that bad dream a reality, financial centers from New York to Tokyo immediately trembled. But the markets then responded with surprising strength and absence of panic. Said one Manhattan stockbroker at midweek: "The market seems to be taking this as if nothing were happening. It seemed that the latest Middle East war was one the Western oil-consuming world...
...Persian Gulf would be of limited duration and would not seriously interrupt or reduce the petroleum flow. The world currently has a comfortable 2 million to 3 million bbl. per day oil-production surplus, and in the short run, other OPEC nations could make up the loss of crude exported by Iran and Iraq...
Nonetheless some oil experts warned that the 100-day supply of crude around the world could quickly evaporate. Two years ago, there was also an international oil glut, but that was quickly gone after the upheavals in Iran resulted in lower production in that country. Much of the so-called glut is oil needed to fill the complex transportation and refining network, and a decline of as little as 7% could touch off emergencies...
...million bbl. per day production in Iran and Iraq could cause a rise in world oil prices of 50% above its original projections by the end of 1981. Since petroleum prices are extremely sensitive to any long-term reduction in world oil supplies, a shortfall in Iranian and Iraqi crude could hike the contract cost of a barrel of oil from its current $32 to about...
...immediately drove up prices of oil purchased on the spot market; oil brokers predicted that prices for long-term supply contracts might soon follow. The spot market reacts quickly to international tensions because it is composed of prices set by traders who usually buy and sell small shipments of crude. Spot oil in Rotterdam rose from $31 to $33 per bbl. last week and very little of it was available. Said one trader: "Everyone believes that Brazil, France and Italy will have to go on the spot market to make up for oil missing from Iraq and Iran. Anybody...