This Weekend’s News: Watching the Price of Oil

There are several trends that are worth
watching as they develop because they could affect the price of oil. 

Friday’s U.S. jobs report contributed to higher oil prices,
in part due to predictions that demand for energy will continue to rise as the
U.S. economy recovers. “U.S.
benchmark crude increased by $1.48 on Friday to end the week at $97.84 per
barrel,” CBS News reported. “It
was the first time since Jan. 26 that the price of crude ended the day higher.
Brent, used to price international varieties of crude, rose by $2.51 to finish
at $114.58 per barrel.” The report added:

Prices rose after the government
reported that the U.S. economy added 243,000 jobs in January. That was the
biggest increase since April of last year, when 251,000 jobs were created. The
unemployment rate fell to 8.3 percent — the lowest in three years. The
positive U.S. jobs data added to evidence that the world's largest economy —
and biggest user of gasoline — is growing stronger. 

Elsewhere in Nigeria, militants with the Movement for the
Emancipation of the Niger Delta claimed responsibility for an attack against an
Eni SpA oil pipeline. “A
Rome-based spokesman for Eni, speaking on condition of anonymity per company
policy, acknowledged that either a fire or attack had happened on the pipeline,
cutting about 4,000 barrels of crude oil production a day,” The Wall Street Journal reported on
Sunday. Nigeria, it is worth noting, is America’s fifth largest oil supplier.

Despite concerns about Iran’s announced military exercises
in the Strait of Hormuz, a senior Iranian diplomat said that Tehran would not
block the strait, dampening down concerns that Iran could close off a major
chokepoint through which 20 percent of the world’s oil is shipped. “The
remarks by Ali Ahani, Iran's ambassador to France, are in contrast with threats
to close the Strait over the past six weeks that have come from legislators and
some members of the country's Revolutionary Guard,” according to The Wall Street Journal. “Mr.
Ahani's remarks suggest the country's highest authorities are not backing these
threats, which could dampen oil prices that have recently risen on fears of
supply disruptions.” Recent reports have cited that the closure of the
Strait of Hormuz would have an immediate and dramatic affect on global oil
prices, potentially raising the price by 50 percent.

These are just a few of the
global trends and events that have the potential to affect global energy
prices. To be sure, some of the developments are welcome, but energy analysts
will nevertheless need to be watchful of how these positive developments (like
a rebounding U.S. economy) will affect the global energy market. Meanwhile,
persistent instability in Nigeria and the potential closure of the Strait of
Hormuz will need to be watched closely, especially given the uncertainty surrounding Israel and Iran.

This Week’s Events

On Wednesday at 9:30 AM, Carnegie will explore Unconventional
Oil: Illuminating the Global Paradigm Shift to New Petroleum Fuels. At 2 PM,
InfraGard will host an event on Threats to the
Energy Sector - Electromagnetic Pulse (EMPs). At 5:30 PM, head to the GWU’s
Elliot School for Carbon
Democracy: Political Power in the Age of Oil.

On Thursday, Johns Hopkins University will host a noon
discussion on Smart
Regulation and Federalism For the Smart Grid. At 2 PM, Bridging Nations will
examine The
Intersection of Energy, Environment and Population.