Arc of Instability = $200 Oil

Satyajit Das, the author of "Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives," is not one of the world’s great optimists. But what is clear from his work is that he understands risk.

And he is telling investors that $200 a barrel is a distinct possibility and, over the long term, $500 is feasible.

Das said he is very worried about the price of oil and the chances of political upheaval in Saudi Arabia.

“The fundamental issue is people are focused on Bahrain, Libya and Qatar, the real elephant in the room is Saudi Arabia, it is one of the most repressive regimes in the region and more unstable than many think,” Das told CNBC Thursday.

“There are some dangerous undertones in the region," he said. "Saudi sending troops into Bahrain could be setting up a Sunni/Shia regional conflict.”

The West’s good intentions in Libya could simply add to more anti-Western feeling in the region which could destabilize the world’s central bank of oil, Saudi Arabia, Das said.

“An arc of instability that starts in Morocco and ends in Afghanistan has been created and Saudi sits in the middle of this arc," he said. "The king is well over 80 years old, the future of Saudi Arabia looks very unstable.”

Das questioned whether the ruling elite has the stomach for a fight and predicted the seriously rich Saudis would rather jump on their private jets and head for their luxury homes in London or Beverley Hills.

“Oil could hit $200 if there is political upheaval in Saudi and with oil running out over the next 10-20-30 years 500 dollars a barrel is feasible.”