Part 3. Matthew Levitt, terrorism expert
- Arguably, the events of the past few weeks help delegitimize terrorist groups.
- Accomplished regime overhaul in a few days, when terrorists couldn't do so through years of activity.
- Typical pattern: Unity of opposition during overthrow; sharp splits during government formation.
- Oil supply concerns go beyond days and weeks; could be months or years of disruption in some cases.
- Saudis could send forces into Bahrain if they perceive a risk of Bahrain being pulled into Iran's orbit.
- Appears to be low risk at present.
- Still, Saudis were disappointed that Bahrain pulled back from violently putting down the protests.
- The Saudi government is talented at buying stability.
- The only risky region for them is the oil-rich, Shia-dominated east.
- The United States has limited leverage in this situation.
- No-fly zone in Libya may be on the table.
- If we don't respond when Qaddafi is strafing protesters with gunfire from helicopters, it's hard to imagine a level of oppression that would be sufficient for us to respond.
- International financial response has been strong, preventing former officials from stealing money from Egypt, Tunisia, etc.
Part 4. Lawrence Eagles, oil expert
- Oil market late to wake up to risks, but now very volatile.
- Recent low volatility was unrealistic given the geopolitical situation.
- Conversely, sudden extremes may be an overreaction.
- There is a need to take stock of actual risks, and probabilities of various outcomes.
- Libya oil outage likely to last months, but the loss is finite.
- Saudis are selling oil from storage, offsetting losses.
- We may not see another contagion event.
- Moderating risk plus new supply would lead oil prices down.
- Initial dip would meet resistance from nervous buyers.
- Longer-term lack of contagion could lead to lower prices much closer to recent historical levels.
- The OECD will be very concerned about higher energy prices' effect on global growth.
- Very worried about return to recession.
