Crude Oil Price Surges -- Again. Get Used To It

If Turkey launches any manner of military operation in the middle east -- complicating the already entangled situation -- look for the price of oil futures to beat $100/ barrel, a psychological barrier likely to give full vent to a further buying frenzy if the Turkish incursion lasts for any substantial period (and assuming that the current mid-east military forces do not diminish their numbers or presence).

The relevant AP article describes present fears (or hopes depending on whether you are a hedger or speculator) thus:

"Oil futures rallied to a new record of over $88 a barrel Tuesday on concerns about disruptions in Middle Eastern crude supplies and a growing view that domestic supplies aren't sufficient to meet fourth-quarter demand.

Traders are concerned that a Turkish incursion into Iraq in search of Kurdish rebels could disrupt crude supplies from northern Iraq."

Any disruption is likely to send oil prices much higher, as the market already shows signs of lowe inventories. With supply dwindling below demand, even the smallest further reduction of supplies, or else increase in world demand, is likely to set off a price surge in the highly sensitive crude markets.

This need not concern the Turks, as even lesser producers like Ethiopia have seen recent rebel attacks on oil refineries and production plants lead to price spikes, as the news hits the ticker. With such volatility, the spread traders are likely going to be the big winners in futures markets.