Editorial: Rumours Of Wars
"And ye shall hear of wars and rumours of wars: see that ye be not troubled: for all these things must come to pass, but the end is not yet."Matthew 24:6
As the dust settles after a tense G20 Summit in St Petersburg, it seems that military intervention in Syria has been postponed for another week.
Despite this, and with the option for incursion firmly on the table at the Êlysêe and the White House, Brent Crude is $113 per barrel and the markets are twitchy. As discussed here last week – military strikes on Syria itself are unlikely to engender price hikes – the embroilment of neighbouring states in a regional Sunni-Shia conflict certainly will.
Seven Middle Eastern nations that could be brought into the melee account for 27 million barrels of daily oil production, or 27 per cent of total global output.
Let’s look at the facts: The 2011 overthrow of Ghadaffi in Libya equated to a 2 per cent loss of global production leading to a 20 per cent increase in crude oil prices.
During the OPEC embargo of 1973, oil exports from the Middle East nose-dived from 1.2 million barrels per day to only 19,000 barrels. Eight per cent of global production was voided. Oil prices quadrupled in three months precipitating a global economic recession.
In 2013, a protracted regional conflict with more than a quarter of global oil production annulled is almost unthinkable, and hopefully preventable. Yet wherever rumours of wars abound, consequence will travel in their wake….