Oil forecasts

A CONTRIBUTOR | JANUARY 2012 | SOURCE: Zawya

It's only the second week of the year and oil analysts are already in a frenzy, making bold predictions for crude prices -- from alpha bearish to mega bullish.

The latest bold prediction came from Capital Economics who have thrown a challenge to other analysts by predicting that Brent crude will average around USD85 this year.

Oil forecasts

Unpredictable geopolitical outlook

But oil predictions can turn on a dime.

Most analysts think a flare-up of conflict with Iran could send prices upwards of USD150 in the immediate future and a sustained disruption of supplies could well see prices head much further north, effectively reversing the fragile global economic recovery.

And while last year Iraq and Kazakhstan emerging as the great hopes for stable oil supplies, the situation in both the countries has changed radically.

"In a matter of days both countries threatened to descend into chaos," says UK-based Centre for Global Energy Studies (CGES).

Iraq's Sunni Vice President Tariq al-Hashemi fled to the Kurdish north in order to evade a warrant issued for his arrest on charges of terrorism, while last Thursday 60 people died and 150 were injured when co-ordinated blasts were set off in Baghdad.

Meanwhile, in Kazakhstan oil workers clashed with police, resulting in 14 deaths and the declaration of a 20-day state of emergency in the western oil city of Zhanaozen, in Mangistau region, which could threaten crude output, notes CGES.

Related articles: Trouble in Iraq and Kazakhstan threatens crude output

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