And of course we all remember what happened when the price of oil got that high back in 2008. The global economy was plunged into the worst downturn since the Great Depression of the 1930s.
A major conflict in the Middle East, especially if it goes on for an extended period of time, could send the price of oil to absolutely ridiculous levels.
Every single day, a massive amount of oil is moved through the Suez Canal. The following is from a recent Wall Street Journal article…
To the southwest is the Suez Canal, one such chokepoint, which connects the Red Sea and the Gulf of the Suez with the Mediterranean Sea. The canal transports about 800,000 barrels of crude and 1.4 million barrels of petroleum products daily, according to the U.S. Energy Information Administration.
Another regional oil shipping route potentially threatened by the Syria crisis is the Sumed, or Suez-Mediterranean, pipeline, also in Egypt, which moves oil from the Persian Gulf region to the Mediterranean. The Sumed handles 1.7 million barrels of crude oil per day, the EIA said.
And of course an enormous amount of oil moves through the Persian Gulf each day as well. If the Suez Canal and/or the Persian Gulf were to be shut down, there would almost immediately be global supply problems.
So how high could the price of oil go?
Well, according to CNBC, some analysts believe that $150 a barrel could easily be hit if the U.S. attacks Syria…
Some analysts believe even U.S. crude, West Texas Intermediate (WTI crude) could get close to the $150 zone. “If oil prices spike on the Syria attack, and surge above $120, the next logical upside target is going to be the 2008 high of $147, which could easily be taken out,” said John Kilduff of Again Capital. “It’s the retaliation to the retaliation that we have to be worried about.”
If the price of oil soars up to that level and keeps going, we could see the price of gasoline go up to four, five or maybe even six dollars a gallon in some areas of the country.
You better start saving up lots of gas money.
It looks like you are going to need it.
This article is brought to you courtesy of Michael Snyder.