The most surprising thing about the instability in the Middle East at present isn’t the length of the current conflict between Israel and Hamas or that it has engulfed 2 separate sovereign nations in the form of Syria & Iraq with the threat of a complete collapse with military success from a previously unheard organisation, ISIS. For me, the most surprising effect is, on an average basis this is the lowest Oil price we have seen since the start of the year. Since the 1970’s, arguably Oil, and the supply of, has been at the fore front of every conflict on that continent; the liberation of Kuwait by American forces in the first Iraq War in 1991 and the rush by British forces to secure the Oil fields of Basra in the second Iraq conflict of 2003. But could geo-political instability, historically a key driver for upward aggressive price spikes in Oil, no longer be the crucial driver of price action that it once was? Certainly the US dependency on Oil
imports has changed dramatically with the inception of shale and gas fracking – in addition, most recently, the International Energy Agency has lowered demand for 2014 for developed nations. Have we seen the last of a triple digit Oil price? Maybe not- but clearly a change is happening in the energy market.
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