Oil Transit Points

 The illustration depicts the importance of Strait of Hormuz. With continued tensions in Iran, Oil prices will continue to remain at higher levels

Oil and Economy - Different scenarios

Standard Charted provides a matrix which envisages effect of oil on economy and different assets in all the scenarios possible

Source Standard Charrted, pragcap.com

Crude Oil Speculation

The non commercials net positions have crossed pre crisis levels. This might suggest that the speculation in the markets have reached a record high and even the slightest of bad news can bring the market sharply

Crude Oil overbought

it seems revolution has a cost and this time its $ 120 / barrel. But will we sustain this massive rally in oil prices. technically, if WTI remains above $ 93 , the rally is here to stay but we r still not sure of when and how much. Another view is from Bespoke investment who comes comes out with a very interesting piece of data which suggests that oil seems overbought and it might spike further right now.

"the price of oil closed more than three standard deviations above its 50-day moving average on Wednesday. This is a feat that hasn't been accomplished in more than ten years, and going back to 1983, it has only occurred in eight other periods. In the table below, we highlight the first day in each period where this occurred as well as the commodity's performance over the next week and month. In more than half of the prior periods, crude continued to rise, averaging gains of 1.07% over the next week and 4.03% over the next month"

Source - BespokeInvestement

Eqypt and oil price

The crisis in egypt is making oil shooting through the roof. The vents in Egypt will not only decide the fate of the nation but also the middle east which is the main supplier of the oil

WSJ 's take

The turmoil in Egypt is reverberating around the world, battering stock markets, driving up oil prices and raising questions about whether the rising cost of crude could slow the global economy.

The Egyptian stock market is expected to be closed Monday, after shares fell 17% late last week. Most Persian Gulf markets fell Sunday, with Dubai tumbling 4.3% and Oman 3%. The Saudi Arabian stock market ended up 2.5% after sliding 6% on Saturday. Prices for U.S. benchmark crude futures leapt $3.70, or more than 4%, to $89.34 a barrel on Friday. In Asian trading early Monday, U.S. oil futures were trading up 87 cents, or 1%, at $90.21 a barrel.

J.P. Morgan economists estimate that a 10% increase in oil prices, if sustained, would slow global GDP growth by a quarter-percentage point. They expect global output to rise at a 3.6% annual rate this quarter.

"The principal concern is that civil unrest spreads to Middle Eastern and North African oil producers, producing significant reverberations in financial asset prices and confidence," J.P. Morgan said in a research note.

For the U.S., the surge in oil prices comes just as the economy appears to be growing at a pace, which, if sustained, could bring down unemployment in the months ahead. Several European economies are growing more slowly or even contracting due to the continuing effects of the financial crisis.

About a million barrels a day of crude and refined products are shipped northward on the Suez Canal, according to the U.S. Department of Energy. A separate pipeline across Egypt carries 1.1 million barrels a day between the Red Sea and the Mediterranean. Together, that is roughly 2% of global oil production.

Closing the Suez Canal would force ships to seek other routes, adding about 10 days to the time it takes for Mideast oil to reach the U.S. and 18 days for the trip to Northern Europe. That alone would push up crude prices even if supplies were adequate due to emergency reserves around the world.

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http://online.wsj.com/article/SB10001424052748704832704576113822189671908.html?mod=googlenews_wsj