Middle East Burning

I normally don't talk about foreign affairs or bother to analyze them because I'm most likely wrong, but recent events in the Middle East has got me thinking.  I'm an Economics major and the events in the Middle East has gotten my econ mind lighting up like fireworks.  Protests and mass demonstrations first started in Tunisia, then spread to Egypt, then Algeria, and now Yemen and Bahrain, and in some parts of Iran.  I wonder if these demonstrations would lead to a 1979 Iranian style overthrow of their dictators, leading to theocratic regimes taking over.  The people of Egypt are celebrating that their country is transitioning into a democracy, but anyone that studies history of various nations will realize that popular sentiment can easily evolve into something more frightening.  I'm talking about the more fringe elements of a revolutionary movement.  Nationalistic sentiment, or in the Middle East's case, radical Islamic elements, could easily hijack every revolution that is going on right now.  In Egypt for example, the Muslim Brotherhood is one of the major players and organizers of the protests in Egypt.  Though officially the Muslim Brotherhood is non-violent, there have been possible links between it and various terrorist activities.  Aside from this, we can be sure the Iranians are working their mojo in creating factions that align to their interests.

This is where my econ mindset jumps in.  The Middle East is a major source of oil, and it is a lynch pin in the trade between Asia and Europe.  If all of these "revolutions" truly turn into a nationalistic movement across the Middle East, then what would happen then?  Would they stop the flow of oil to the Western world under the belief that it should benefit themselves instead?  Would they shut down the Suez Canal or at least prevent ships from countries supporting Israel from crossing?  If that happens then the economic implications would be startling.  Shipping costs for goods would jump, oil prices would skyrocket just from pure speculation alone, leading to a double dip recession that so many people fear.  Shipping costs doesn't only affect the price of consumer goods, the price of shipped food such as grain will jump.  In places such as China, there are already reports that food prices were jumping up in the double digits, and that was before this whole revolution debacle.  

Before the whole financial/credit crisis in 2007, speculation caused oil to rise to about $140 per barrel due to the fear of a 1972 style OPEC embargo.  I suspected that this was the cause of the credit crisis.  When companies started facing a higher fixed cost, such as transportation costs due to high gas prices, they started trimming down by eliminating the variable cost, workers.  One by one, workers were fired and they weren't able to pay their mortgages, leading to the financial crisis.  Could this happen again?  Could future speculation, caused by this revolutionary movement across the Middle East, inhibit the economic recovery that so many people need right now?  Time can only tell.