Geopolitics take centre stage once more as oil rallies
27/3/15
Geopolitics take centre stage once more as oil rallies...
"Battle between Saudi Arabia and Iran for Yemen...", Daily Telegraph, p.B1
Make no mistake, despite the first tentative signs of economic
growth appearing in previously moribund quarters the fundamental
supply/demand equation in the oil sector remains firmly on the
side of oversupply... by up to 1.5m barrels per day, according to Ambrose Evans-Pritchard.
Yesterday's jump in the price of crude after the Saudis' airstrikes in Yemen
might therefore be seen as an understandable though knee-jerk reaction in a
continuing bear market. After all, Yemen itself does not produce enough oil to
have any bearing on the global oil price.
But there remains plenty of "what ifs" . What if an escalating conflict saw the closure of the Bab el-Mandeb Strait off Yemen's southern tip through which 7% of the world's oil trade passes? What if Yemen is lost entirely and becomes even more of haven for the world's most aggressive terrorist groups? And most worryingly perhaps, what if this is just one more step towards an almighty conflagration between sunni Saudi and shia Iran (the shia Houthi rebels in Yemen are backed by Iran). Worth pondering, surely?
But there remains plenty of "what ifs" . What if an escalating conflict saw the closure of the Bab el-Mandeb Strait off Yemen's southern tip through which 7% of the world's oil trade passes? What if Yemen is lost entirely and becomes even more of haven for the world's most aggressive terrorist groups? And most worryingly perhaps, what if this is just one more step towards an almighty conflagration between sunni Saudi and shia Iran (the shia Houthi rebels in Yemen are backed by Iran). Worth pondering, surely?
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