Should We Be Worried About Oil Prices?
Oil prices look to remain high short term but drop longer termWith oil supply disruptions across the world more than compensating for the increased oil supply from the Shale revolution in the USA, what next for oil prices?
Disruption to oil production in Libya from armed militias, Iraq from armed attacks, in South Sudan from political interference and in Iran from US sanctions, has led to a recent increase in crude oil prices to above the €110 /b (and far beyond the unofficial OPEC target of €100 /b).
Add to this the political turmoil now surrounding Egypt and the Suez Canal ( a hub for global oil transport) and in the short term, barring another financial melt down, we may see oil prices rising further. Longer term, increased oil supply from shale oil in the US should have a moderating effect on prices but only on condition these supply disruptions are resolved in a sustainable manner.