15th October 2014 | Posted by Katie Deadman
The great puzzle about oil prices is why have they been so weak when geo-political tension has been so high?
All the historical experience from the Yom Kippur war in 1973 onwards would suggest the opposite. Even the normally authoritative IMF has been predicting a price spike stemming from the war against Islamic State.
What we appear to be witnessing is a post-OPEC reaction in the markets. America’s great fracking and shale revolution has transformed the oil supply channel. The US can economically pump more oil as long as the price remains above $75-a-barrel, the approximate cost of opening new wells.
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