Why Are Oil Prices Rising?
Bottom line: There’s not much excess oil supply. Any flare-up in the world can cause the jittery oil market to jump. Middle East tensions worry investors about supply constraints. During the weekend, Turkey made some noise about pursuing rebels into northern Iraq. Even though a Turkish incursion wouldn’t crimp the global oil supply by much, any disruption can tilt the tight market off balance. “Nobody has any spare capacity to speak of, so if there’s potential for a shortfall, markets respond pretty dramatically,” said Ken Medlock, a fellow at the James A. Baker III Institute for Public Policy at Rice University. Does the weak U.S. dollar exaggerate oil prices? Yes. The dollar just keeps losing ground against the euro and other currencies. When the value of the dollar drops, that means a dollar doesn’t go as far as it used to. Since oil trades globally in dollars, oil prices rise right away to compensate. That also means that as currency traders brace for the Federal Reserve to cut int
