Still there are concerns for future supply! Reuter’s News reports, “Sustained oil prices above $100 could further heighten tensions over control of the South China Sea, as Vietnam, China and other Asian nations look to stake their claim on potential untapped energy resources and reduce their dependence on costly imports. Brent oil LCOc1 prices briefly rose above $127 a barrel in April of this year, the highest since 2008 just before the start of the financial crisis, and sustained levels above $100 were reached in late January on an evolving combination of recovering global demand and reduced supplies caused by unrest in Libya.
”While oil prices are notoriously volatile, key market analysts see Brent well above $100 a barrel through 2012 and a growing global supply and demand gap, factors that make potential oil discoveries in the South China Sea increasingly attractive for countries claiming sovereignty, analysts said.
"The high oil price is a major driver in this. China needs access to oil and gas to reduce their dependency on overseas supplies, which presents a strategic vulnerability," said Ian Storey, a fellow at the Singapore Institute of Southeast Asian Studies. "This is partly why tensions have been rising over the last two to three years because the Chinese feel the other claimants -- particularly Vietnam, Malaysia and the Philippines -- have been unilaterally plundering natural resources that really belong to them. China has made the largest claim over the area, and Taiwan, Vietnam, Brunei, Malaysia and the Philippines also assert territorial sovereignty, which covers one of the world's busiest sea lanes and also provides rich fishing opportunities.”
Reuters says that, “Except Taiwan, all other non-Chinese claimants are members of the 10-nation Association of South East Asian Nations (ASEAN), which will be holding the region's biggest security forum this week. The meeting at the Indonesian resort island of Bali is expected to focus on the South China Sea dispute and China's perceived muscle-flexing there. Estimates for proven and undiscovered oil reserves in the South China Sea range from 28 billion to as high as 213 billion barrels of oil,” the U.S. Energy Information Administration (EIA) said in a March 2008 report.
“The most optimistic outlook would be the equivalent to around 60 years of current Chinese demand. The Chinese refer to the South China Sea as the new Saudi Arabia or the El Dorado of oil. But I think that their claims of oil and gas reserves are widely optimistic," Storey said. The U.S. Geological Survey last year estimated a 50% chance that the area would hold at least 10.25 billion barrels of undiscovered oil, with most of it near the Spratly islands. A must read in Reuters!
With QE 3d hanging out there it may be time to buy breaks!
Phil Flynn is senior energy analyst for PFGBest Research and a Fox Business Network contributor. He can be reached at (800) 935-6487 or at firstname.lastname@example.org.