Currently, crude oil prices are trading around $105 per barrel. Eugen Weinberg of Commerzbank estimates that $20 to $25 of it reflect fears of unrest in the Middle East; based on supply and demand fundamentals alone, oil prices would be closer to $80 to $90 per barrel.
Weinberg made the comments during a Bloomberg TV interview.
He expects the fears – and oil prices – to ease in the coming months.
He said the oil installments in Libya weren’t significantly damaged and the country should resume production in a few months. In the meantime, Saudi Arabia, which has significant spare capacity, will pick up the slack, according to Weinberg.
On Tuesday, oil prices surged as tensions escalated in Yemen; the fear is that the unrest and disruptions will spread to neighboring Saudi Arabia.
Weinberg, however, thinks Saudi Arabia will be fine and that oil prices will therefore fall soon.