2012 Crude Oil Price Prediction and Discussion

[idiotstockinvestor]

http://articles.economictimes.indiat...oil-production

Oil is a cyclical up and down commodity and rose from the $70's to over $100 in a matter of weeks. For those who invested in a crude futures ETF before that I'm sure they did quite well.

The article above predicts prices for 2012 to remain under $100 and so far that's generally been the case.

Unless the world economy has a miraculous recovery this year I think this call will be correct. There's also one variable which is if the EU embargo Iranian oil and Iran blocks the Strait of Hormuz as they've threatened. Some analysts have claimed oil could easily hit over $150 a barrel because 1/6 of the world's oil passes through there including Saudi Arabia and other Gulf nations.

If this blockade happens I'd jump into crude quickly but would dump it faster after a decent profit and at the first sign of a resolution to the blockade.

[idiotstockinvestor]

So the EU has embargo'd Iranian oil and Iran is threatening to close the Strait of Hormuz and to cancel EU contracts for Iranian oil fields and to suddenly cut off the supply to Europe without warning (supposedly causing prices to hit $150 per barrel) according to Iran.

http://www.reuters.com/article/2012/...80M0IU20120123

[idiotstockinvestor]

I'd like to add that all of this has done little to change the price of oil. But I bet if Iran suddenly cut off the EU supply or blocked the Strait of Hormuz this would change quickly.

[idiotstockinvestor]

http://finance.yahoo.com/news/sancti...190727789.html

Iran's parliament is due to debate a bill on Sunday that would cut off oil supplies to the EU in a matter of days, in revenge for a decision last Monday by the 27 EU member states to stop importing crude from Iran as of July 1.
"Generally, the parties to incur damage from the EU's recent decision will be European companies with pending contracts with Iran," Ahmad Qalebani, head of the National Iranian Oil Co. told the ISNA news agency.
"The European companies will have to abide by the provisions of the buyback contracts," he said. "If they act otherwise, they will be the parties to incur the relevant losses and will subject the repatriation of their capital to problems."
By turning the sanctions back on the EU, Iranian lawmakers hope to deny Europe the six-month window it had planned to give those countries most dependent on Iranian oil - including some of the most economically fragile - time to adapt.