There are reports that Saudi Arabia will raise its oil production in case the situation between Iran and the West will further escalate. Will Saudi Arabia come through on this promise? And more importantly, will it keep the oil prices from rising in case of an Iran war?
There are reports that Saudi could raise its oil production by as much as 25% in case the situation with Iran will take another turn for the worst. This news may have been among the factors to pull down crude oil prices yesterday.
But the friction between Iran and the West mainly the U.S. EU and Israel is probably among the reasons for the sharp rise in crude oil prices in recent weeks that reached as of yesterday $124.5 and $105.61 for Brent and WTI, respectively.
Even more than the sharp rise in crude oil prices, the difference between Brent oil and WTI oil price has increased in recent weeks after it had reached during December 2011its lowest level in almost a year. I suspect the rise in the Brent premium was mostly related to the Iran tension.