{"id":67573,"date":"2024-04-25T16:05:45","date_gmt":"2024-04-25T21:05:45","guid":{"rendered":"https:\/\/olduvai.ca\/?p=67573"},"modified":"2024-04-25T16:06:04","modified_gmt":"2024-04-25T21:06:04","slug":"oil-markets-were-unwise-but-right-in-the-israel-iran-crisis","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=67573","title":{"rendered":"Oil Markets Were Unwise But Right in the Israel-Iran Crisis"},"content":{"rendered":"
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Oil Markets Were Unwise But Right in the Israel-Iran Crisis<\/span><\/a><\/h3>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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\"Energy<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n
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The Middle East seemed to be on the brink of war last week and oil prices fell. Was the market wrong?<\/p>\n

Brent futures price closed at $90.45 per barrel on Friday, April 12 before Iran\u2019s missile and drone attack on Israel (Figure 1). When markets opened on Monday, April 15, prices rose less than $1 before ending lower and closing at $90.02 on Tuesday. After Israel\u2019s counter-attack on Friday, April 19, Brent rose from $86.96 to almost $91 only to close at $87.29.<\/p>\n

\"Brent
Figure 1. Brent futures price fell -$3.16 (-3%) from $90.45 to $87.29 for the week ending April 19. Source: CME & Labyrinth Consulting Services, Inc.<\/figcaption><\/figure>\n

This seems remarkable considering that oil flows through the Persian Gulf could have been disrupted. About\u00a015.5 mmb\/d (million barrels per day) of crude oil<\/a>\u00a0pass through the Strait of Hormuz (Figure 2). There\u2019s an additional 5 mmb\/d of refined products, and\u00a010 bcf of liquefied natural gas<\/a>.<\/p>\n

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Figure 2. Crude oil volumes that passed through the Strait of Hormuz in the first half of 2023. Source: Modified from @Nate Hagens with EIA data & Labyrinth Consulting Services, Inc.<\/figcaption><\/figure>\n<\/div>\n

There was a time when military outbreaks in the Middle East would have caused a sharp increase in world oil prices. Figure 3 shows a comparison of Brent price in the one hundred days following the 1990 Iraqi invasion of Kuwait and after the 2023 Hamas attacks on Israel.<\/p>\n

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Figure 3. Comparison of Brent price in the one hundred days following the 1990 Iraqi invasion of Kuwait and after the 2023 Hamas attacks on Israel. Source: @johnauthers (Bloomberg) and Labyrinth Consulting Services, Inc.<\/figcaption><\/figure>\n<\/div>\n

It\u2019s worth pointing out that there is no major oil production in Israel or in surrounding countries. The involvement of Iran in the recent conflict, however, makes these two events comparable at least in the last few weeks.<\/p>\n

There are a slew of mainstream narratives for oil market\u2019s phlegmatic reaction to recent attacks in the Middle East.<\/p>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Oil Markets Were Unwise But Right in the Israel-Iran Crisis The Middle East seemed to be on the brink of war last week and oil prices fell. Was the market wrong? Brent futures price closed at $90.45 per barrel on Friday, April 12 before Iran\u2019s missile and drone attack on Israel (Figure 1). When markets […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,3,5],"tags":[8195,441,1049,588,592,862],"class_list":["post-67573","post","type-post","status-publish","format-standard","hentry","category-economics","category-energy-2","category-geopolitics","tag-art-berman","tag-iran","tag-israel","tag-oil","tag-oil-price","tag-war"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67573","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=67573"}],"version-history":[{"count":2,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67573\/revisions"}],"predecessor-version":[{"id":67575,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/67573\/revisions\/67575"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=67573"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=67573"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=67573"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}