Oil price uncertainty

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Due to the events taking place in Libya at the moment, the entire world is experiencing higher oil prices. Although Libya is producing less oil at the moment, much of rise in the oil price is actually¬†attributable¬†to fear and uncertainty. The real concern is if this tide of change and potential democracy comes to Saudi Arabia. If this happens then one of the world’s largest oil producers will be a far less certain source for the essential resource. With this fear in mind there has been a lot of talk about how a rise in oil price might cause another recession.

Although analysts and economists have varying points of view and some even sound sure of what they’re saying, the fact is that no one can know with certainty what impact a high oil price will have on the global economy. One thing is certain though. There is no way that uncertainty around oil prices is a positive thing for the economy. Uncertainty in general is the kryptonite to a growing economy. The fact that the uncertainty revolves around a rising oil price makes it even worse for the economy.

The best case scenario is that this Libya issue will be resolved quickly and positively from the perspective of the people there and the oil production levels there as well. Next, it is critical that the Saudi government take steps to make life better for its citizens in many ways. They need to do everything they can to avoid large demonstrations and protests. This doesn’t mean beat and kill people like they did in Iran, but improve their situation so there is no need or desire to protest in the first place. If the world sees this reform begin to take place then the oil price will go down and the world will continue with its recovery.