How will the turmoil in Iran affect oil markets?
The unrest will have the most significant effect on future oil prices and supply. I think the nature of the election will mean more of the status quo in Iran’s energy sector. That means a continuation of underinvestment, possibly a pullback of investment from U.S. and European-based international oil companies, especially since sanctions will likely be extended. In the shorter term, there is the possibility that the energy supply could be disrupted. But OPEC’s surplus capacity has doubled in the last year and oil stocks are well above their five-year average, so it might not have as much an effect on oil prices as it would have a year ago. The other critical point is that oil pries are being driven much more significantly by broader financial market trends. Crude oil futures have more than doubled since mid-March. Unrest in Iran doesn’t help oil prices but it’s not what’s driving oil prices up today. What does this mean for the global economy? One risk is that if oil prices and other c
