A Surprise To Watch Out For – During my interview on Squawkbox Tuesday morning, I was asked if the worries of 2011 would be the same ones we saw in 2010 (e.g. sovereign debt, foreclosures, etc., etc.). I replied that many of them might linger but that I’d keep a sharp eye on oil.
There are several reasons to worry about a surprise spike in oil. I cited unrest bubbling up in Nigeria, a large and important supplier of top grade bonny light.
Then there’s riskiness of Saudi Arabian succession. The king, Abdullah, age 86, is the subject of recent rumors about his health. Unfortunately, so too is his designated successor, Prince Sultan, age 82.
Under the Saudi system, the crown does not pass from father to son but rather from brother to brother. There are 18 brothers or half-brothers sired by King Saud, founder of Saudi Arabia.
Should there be disputed or simply just confusion about the succession, it might inspire, al Qaeda on the Arabian Peninsula, or some other adventurers, might try to disrupt things. If Saudi Arabia production and/or shipment of oil is disrupted, crude could spike sharply. That could benefit other OPEC members.
There are other potential landmines in the oil picture. Mexico’s production is facing some hurdles. Venezuela is anything but stable.
Keep your eye on crude.