Middle East protests diminish global recovery prospects

Latest reports from media suggest that April Brent oil contract on the London-based ICE Futures Europe exchange climbed as much as $2.44, or 2.3%, to touch $108.18 riding on the waves of protests in Middle East, especially in Bahrain and Libya.

And it is just the beginning! Protests are in the offing in Iran, Syria, Jordan, Yemen and Morocco. And once these regions too get significantly affected, it would be an understatement to tell that oil would climb further if not hit through the roof.

The scenarios of unrest have direct effect on oil prices and on global economic recovery. The recovery may return to square one and may even go down the drain if Middle East continues with the trend.

Shockwaves from Libya have by and large affected the movements of global oil price figures.

Mean while Japanese authorities are worried that the recovery of the State which recently gained traction can gain friction, once more. Japanese exports had just started to pick up and the country was moving out of deflation when the unrest struck.

What is true for Japan may hold true for the world. If the unrest continues to simmer there are chances that the world recovery from recession in itself may get affected.

Food prices can ride the wave of inflation and continue to choke the world. This may provoke unrests in other parts of the globe and may even worsen the middle –east scenario and the oil flow situation.

Oil economy forms the back bone of the Middle East and once the exports are stalled it can negatively affect the domestic economies there. Reserves of money and other commodities may get mismanaged or even looted in chaotic situations, ruling out the prosperity factor and savings/ storage playing a deterrent.

Finally a cycle of unrests--middle-east unrests sparking inflation, sparking commodity prices and dampening oil supplies, sparking unrests in various parts of the world (including Middle East)—start playing out.

Saudi Arabia is the last turf! If the Kingdom of Saudi Arabia gets consumed by a wave of protests, the history of world would change forever!

As published in: http://www.commodityonline.com/news/Middle-East-protests-diminish-global-recovery-prospects-36653-3-1.html