Kevin Book, Ben Cahill, Adi Imsirovic, Raad Alkadiri, Kunro Irié, and Leslie Palti-Guzman
The escalating turmoil in the Middle East threatens to reshape global energy markets, yet oil prices remain curiously stable. What’s behind this unexpected market calm in the face of growing regional conflict? The CSIS Energy Security and Climate Program turned to leading experts for insights. In the following essays, they delve into the factors keeping oil prices in check, discuss scenarios that could disrupt markets, and examine how the widening conflict might impact global liquified natural gas (LNG) supplies.
Supply Risk Rises Again
Kevin Book, Senior Adviser (Non-resident), Energy Security and Climate Change Program
For months, oil markets did not seem to be pricing in the prospect that Israel’s multifront battle against Iran and its regional proxies might disrupt global supplies. The front-month Brent crude futures price had fallen about 20 percent, from roughly $90 per barrel (bbl) when Tehran and Tel Aviv last confronted one another directly in mid-April, to a little less than $72/bbl at the end of September. Last week, however, Brent surged approximately 10 percent or a little more than $7/bbl, and on Monday it reached an intraday peak north of $81/bbl. Traders appeared to be factoring in strikes on Iranian petroleum infrastructure.
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