Over the past three months, global oil prices have surprisingly remained low between $60 and $65 per barrel (Brent benchmark) despite continued hostile incidents in and around the Persian Gulf - the waterway which transports nearly 25 percent of global oil supplies. I use the term “low prices” as a relative comparison with over $100 prices experienced in periods prior to 2014.
One would have expected the ongoing geopolitical crisis in the Middle East to push oil prices upwards, fuelled by fear of potential supply disruptions. For prices not to have increased is an indication that the world has a reasonably sufficient oil buffer that insulates the market from real or speculative shortages.
