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THE WALL STREET JOURNAL: Framing the Issue: Unrest Behind Oil's Rise

A thwarted attack on a massive oil facility in Saudi Arabia rattled oil markets Friday, pushing up crude-oil futures by more than $2 a barrel.
THE BACK STORY: Heavy demand has kept the price of oil at about $60 since the end of July 2005. But lately, political concerns have been the primary driver of energy prices. In Saudi Arabia, the No.1 oil producer accounting for more than 30% of OPEC's production in 2005, suicide bombers Friday attacked the world's largest oil refinery, the Abqaiq oil complex. Although security forces stopped the assualt, analysts worry about more attempts on oil installations. Nigeria, which produced about 8% of OPEC's output last year, has been dealing for several months with militant attacks. Earlier this month, gunman took nine foreign workers hostage there, forcing oil giant Shell to shut in 450,000 barrels of daily production amid the unrest. Traders are also concerned over Iran, which is currently in a standoff with the West over its nuclear-energy program. In 2005, Iran ranked second in OPEC crude production.
WHAT'S NEXT: Oppenheimer analyst Fadel Gheit warned that any attack that shuts down a major Saudi facility could send the price of oil skyrocketing to more than $100 a barrel. Meanwhile, supply concerns are likely to remain subdued for the next couple of months due to the greater-than-usual stockpiles of key energy products, including crude and heating oil, as the unusually warm winter comes to a close. — David A. Gaffen

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