A New Oil Crisis Is Developing In The Middle East
After over 40 years in the energy business, more than two decades of that with a parallel career in intelligence, I regularly witness the impact of global developments on the energy markets.
So it’s hardly surprising that I often address geopolitical events here.
Currently, situations in Latin America (Venezuela), Asia (the South China Sea crisis), and Africa (ongoing civil conflict in Libya and Nigeria) show how widespread the geopolitical impact is on energy prices and availability.
Each one either is, or could easily, spike oil price volatility.
But the instability in a different region remains the biggest single factor in how the two sectors interact…
The Middle East.
There, two significant events unfolded over the past week. Each is certain to have an impact on how crude oil trades in the near-term.
The curious de-certification of JCPOA (the Joint Comprehensive Plan of Action, more popularly known as the “Iranian nuclear accord”), by President Trump, was followed in short order by the ominous hostilities between Iraq and Kurdistan over the status of the city and region of Kirkuk.
Both impact the northern Persian Gulf, already a region with a short fuse.
The toppling of Raqqa, the self-styled ISIS capital, may be underway in Syria, but the ongoing cross-border disagreements have already spread elsewhere.
And they could set the whole region on fire…
Sanctions Don’t Work Very Well
First, take the Iranian nuclear deal. Decertifying it was a curious choice by the White House, as it actually accomplishes very little.
The move kicks the can back to Congress, where the legislative branch has 60 days to decide whether the U.S. remains in the accord.
What it does do, of course, is increase volatility.
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