A few days ago I was sitting watching the news about Libya and it was mentioned that the oil price had dropped as the civil war looked set to end. I know very little about Libya that everyone else doesn’t know so I thought instead of throwing in my tuppence worth I would look at the wider oil situation.
Below is an analysis of the price of oil correlated against key events in the Arab Spring. Along the X Axis are the dates of the for the past 8 months, along the Y Axis is the price of oil (in dollars per barrel) and correlated to these on the graph are events in the Arab Spring. If you put your mouse on any of them it will tell you more about them.
Let me state at the beginning that correlation is not necessarily causation. The situation in the Middle East is not the only factor determining oil price but it plays a major role so it is worth looking at specific dates.
Generally it is fair to say that when Mohamed Bouazizi set himself on fire in Tunisia on the 17th of December 2010 the oil price was relatively stable at around 92p per litre. Within days it had risen, but only a few pence.
The price zigzagged up slowly for a few days so that by the time Ben Ali stood aside in Tunisia it was 98.65. Immediately after there was a slight dip in the price but it reached similar heights within two weeks when Mubarak fired his entire cabinet but refused to stand down.
By the time Mubarak announced he was to step down on the 11th of February the oil price was 101.55. This was high but the real spike comes in the following days, when protests begin in both Libya and Bahrain.
On the 16 of February the first protests in Benghazi took place, with oil closing that day at 104.29. Over the weekend there were continued protests in Pearl Square, Bahrain. On the Sunday the 20th around 200 were killed by the authorities in Libya. There is an immediate spike in the price of oil, closing at 108 the following Monday and rising to 112.43 by the end of the week.
This continues to rise rapidly, peaking at over 116 on the 1st of March but dropping in the middle of the month after Saudi troops entered Bahrain on the 14th. The price drops from 113 to around 110 in a day. Possibly it was perceived by the oil markets that the threat to Saudi’s crucial oil fields had been quashed.
From there it rises again as the situation in Libya deteriorates fast and Nato makes clear its intention to become engaged militarily. On the 8th of April it peaks at 126.40, the highest it reaches.
Interestingly anecdotally, though probably not too heavily in terms of causation, when Osama Bin Laden was killed on the night of the 1st of May there was a sharp decline in the oil price.
The price fell from 126.03 over the weekend to 109.24 the following Friday. It has since only reached as high as 120.34.
Since then it has gradually come down, albeit with some peaks along the way, to around 106p per litre.
This data is opening up a conversation rather than trying to prove a point. I just thought it was an interesting analysis that I hadn’t seen done yet, I am sure there are thousands of other people far more qualified to tell you about this than I am. That’s what the comments section is for!
Sources: Firstly let me make clear that over the weekends, when the City is not trading, I have put the Saturday and Sunday data as the same as the Friday. This was because it was the only way I could see to enable me to have weekend events in without the graph dropping back to 0.
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