The Middle East conflict and the oil price puzzle
An escalation in the conflict could threaten global oil supplies, so why is the market not reacting?
The continued escalation of conflict in the Middle East has sparked debate over its potential impact on global oil prices. Some analysts argue the market may be underestimating the geopolitical risks and the potential disruption to supplies, but the situation is more nuanced. Since neither Palestine nor Lebanon have any oil (although the latter does have gas), there is no direct danger to oil supplies from the conflict at present. Any geopolitical risk would come from a prolonged conflict with Iran—one of the largest producers within OPEC, with output at 4m b/d and exports of 1.3m b/d of, mainly to China. The market is clearly not ‘buying’ the worst-case scenario as likely An Israeli
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