Supply fears exaggerated

Benchmark light crude prices excluding WTI have trended higher of late driven by the revolutionary atmosphere in North Africa and the Middle East. While the risk of a major supply interruption has clearly increased in recent weeks, we believe such an event would be short-lived. Near-term, Brent could easily exceed $120/barrel but a softening trend or even a ‘death spiral’ is looking increasingly likely once the revolutionary fervour in the Middle East is satiated.

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