Below, I’ve posted a map of North Africa and the Middle East. In any country where there’s been civil war, massive protests, genocide, regime change or political strife in the recent past, I’ve placed a red star.

In any country that’s a major oil producer, I’ve placed a black star.

With the exceptions of Afghanistan, Jordan, Tunisia and Somalia, all of the countries that have been experiencing some kind of revolution, political discord or war are ALL major oil producing countries.

These countries account for a total of about 21.3 million barrels of oil production per day - or about 25% of total oil production.

A quarter of all oil production is either in the midst of war, in the midst of regime change or on the cusp of one or the other.

Now, we know what happens with even a small amount of oil production disruption, as oil prices recently spiked from under $90 a barrel to over $110 in the span of a couple of weeks – all because Libya’s paltry 1.5 million barrels per day were in some small amount of danger of being slowed or cut off. That accounts for about 2% of daily supply.

What would happen if a country like Saudi Arabia, (with its 10 million barrels per day) experienced a significant slow down? That’s more than 10% of daily oil production. I don’t think it would be out of the question for oil prices to double or triple in very short order.

Right now, UN forces are scrambling jets over North Africa. Libyan forces just called for a cease-fire.

I wonder what Chinese officials think about all of those Western troops from Great Britain, France, and the United States moving their militaries into the most significant oil producing part of the world…

I wonder what Russia thinks. I wonder what Shi’ite Iran thinks about the West taking sides with Sunni leadership in Saudi Arabia and Qatar in another Middle Eastern war – or even what North African Shias might think of this arrangement.

In 2007, Colonel Gaddafi made an overture to Iran, and proclaimed the whole of North Africa to be Shi’ite. Will he make similar overtures to Iran as UN planes manufactured in America drop bombs on Tripoli?

If you were going to bake up a global war-cake, you wouldn’t need anymore ingredients than the ones we have right now.

And what is the United States thinking? Isn’t it enough that we’re still cleaning up our mess in Iraq, still fighting a guerrilla war in Afghanistan - do we need yet another warfront in the region?

If we were going to help the rebel forces in Libya, it seems like it would have been better to do so a week ago, before many of their strongholds fell to Gaddafi’s air and ground forces.

Will we play the wait and see game with Bahrain, and Yemen as well, only sending in air support after those Governments slaughter enough people to raise international eyebrows?

In any event, it seems as though protracted war will be the rule, rather than the exception. Looking back on this period, our children and grandchildren will speak of the Oil Barrel Wars, fought hot and cold from 1990 to who knows when.

And as we know, an oil barrel burns slowly unlike a powder keg. But the destruction is likely to be the same.

I think we can expect oil prices to continue their ascent - especially as war, rebellion and regime change colors the entire Middle Eastern map.

Later today I’ll be sending out details on some oil investments that are removed from the strife in the Middle East. These companies have the potential to grow their profits as oil prices rise. Look for details on these companies in the afternoon.

Good investing,

Kevin McElroy
Editor