A note out today from SocGen's Michael Wittner warns that Brent Crude will hit $200 in the worst of three scenarios. Namely, when unrest hits Saudi Arabia.
The first scenario is what's happening right now: Libya shutdown, plus widespread unrest in the Middle East and North Africa. Brent price range of $110-125/bbl.
The second scenario is a low risk: Libya shutdown, plus another shutdown in a medium-size producer, plus widespread unrest in the Middle East and North Africa. Brent price range of $125-150/bbl.
The "most extreme, worst-case" scenario is also unlikely: Unrest spreads to Saudi Arabia and threatens Saudi crude exports and any remaining spare capacity. Brent price range of $150-200/bbl.
Wittner says a price spike over $125 might be followed by a collapse due to demand destruction or the release of emergency reserves.
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