Oil prices may hit $115-120 if Middle East instability continues, prominent industry consulting firm Frost & Sullivan has warned. The agency also warned that the fall of oil reserved into the hands of radical groups would be disastrous for the entire world.
“On the advent of a civil war, it is expected that the radical Islamic groups would venture into the countries in this region; this is a key risk to the Western countries. The oil economy of this region would financially support the radical groups to procure advanced weaponry system in large scale,” said John Siddharth, Aerospace & Defence analyst with Frost & Sullivan, South Asia
& Middle East.
He pointed out that Libya, in the thick of the troubles, produces about 1.6 Million barrel of oil out of the total world production of 72 million and majority of it is exported to Europe.
Siddharth also pointed out the increase in oil prices would pressurize ATF prices in India, already amongst the costliest compared to other parts of the world.
“Airlines in India have a huge potential to grow, however it has a cumulative existing debt of US $ 13 Billion. An increase in ATF at the predicted levels would pressurize the airlines to increase prices which would impact the growth of passenger traffic. Indian air travel passengers crossed 52 million mark in 2010 and was expected to reach about 57 million in 2011, however if there is a substantial increase in ATF prices this would not be possible,” he pointed out.