“What happened to the geopolitical risk premium?” asks Peter Warburton of Halkin Services. Turmoil in Gaza, Russia provoking Kiev, and Islamists terrorising Iraq are all events you’d expect to send oil prices soaring. Yet following a jump to $115 a barrel in June, prices have fallen by more than 11% to a 14-month low around $102.
The tension has had no impact on oil production, especially in Iraq, where it has been confined to the north, not the oil-exporting south. Output in traditional trouble spots, notably Iran, Libya and Iraq, has actually picked up recently.
Meanwhile, a surge in [...]