The events that unfolded in Benghazi, Libya, on Tuesday were nothing short of tragic.
If you’ve been watching the news at all, you’ve heard of the attacks on the U.S. Embassy that claimed the lives of Ambassador Chris Stevens and three other officials. On Thursday, those attacks spread to other areas in North Africa and the Middle East.
The catalyst for this violence was said to be a highly controversial low-budget American-made film that ridiculed the Islamic Prophet Muhammad. The film is offensive to the Islamic religion, and the man responsible for its creation has gone into hiding.
The hardest thing to understand in all of this is why the work of one man and his eighty or so cast and crew members has been taken out on innocent Americans who had no part in the production of the film in question. The only thing they shared was the nationality of its creators.
Of OPEC’s 12 member nations — Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates, and Venezuela — Islam is the majority religion in nine.
Not surprisingly, the price of oil rose on news of this recent unrest… and it’s posed to go even higher.
The United States imported 93,000 barrels per day of crude oil and oil products from Libya in June and received 48,000 barrels per day from Egypt, where attacks occurred on Thursday.
Imports from Libya have been steadily increasing since unrest last summer halted the nation’s exports. Libya’s production was still below normal levels, though officials predicted it would be back up by October of this year.
However, analysts in the U.S. are wondering whether or not our imports will be able to reflect that.
The current unrest and the increasing strain on relations and political tensions it continues to create may have a serious effect on U.S. imports.
Even Libyan oil officials are worried about what the security threat will do to national production. After all, there are a number of foreign oil companies that operate in Libya, some of which have sent their foreign workers home due to safety concerns.
Losing some imports from Libya would be difficult, but not impossible to deal with.
We’ve overcome similar situations before. Egypt supplies less, and the U.S. receives no imports from Yemen.
But suppose tensions extend to Nigeria, which supplies the U.S. with 471,000 barrels per day; Iraq, with 649,000 barrels per day; or Saudi Arabia, our second largest source of foreign oil, providing 1.4 million barrels per day…
If production or exports slows from these nations, the price of oil could skyrocket even further.
Oil imports are increasing in price and struggling not to decrease in quality.
If the crisis overseas really is a result of a controversial film — one man’s work — it means tensions are running even higher than we thought…
Our already unstable relations with many of our oil suppliers are becoming increasingly shaky.
The good news is U.S. output has risen since the start of the shale boom.
In fact, the EIA revealed this week that natural gas storage is growing 3% year over year…
Developing these domestic resources will have to take center stage in the continued efforts to decrease alliance on foreign imports.
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