Yemen plunging into a crisis will not affect global oil
30 March 2015
It's been a rough week for India's equity markets with the frontline indices losing almost 4 percent.
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I think the first message that your audience has to consider is that there’s a kind of strong debate as to whether geopolitics and geopolitical cataclysms or political instability in countries in the Middle East and Ukraine etc. have an impact on oil prices. Whether they actually send oil prices in an upward direction or whether oil prices are more dependent on market conditions, such as global demand, demand in India or China, and similar trends. The terrible situation in Yemen has been ongoing for a good few year. But, while the Yemen Crisis is deepening - we’ve seen Saudi sort of intervention, military intervention, even president Hadi is being reported to leave the country to Saudi Arabia - I’m not sure to what extent that is actually having an impact on oil prices. While I checked the crude prices this morning and while there has been a slight increase, about a dollar or so up to fifty-eight dollars per barrel from yesterday, I still think it’s more due to stronger than expected global demand. So, conditions are slightly even more buoyant at the global level according to reports from OPEC, and it’s still more the market conditions that are having an impact on oil prices. More forecasts for the month of April are suggesting that the oil prices are going to be hovering between 55 and 60 dollars per barrel, and we are 58 at the moment. The sectarian conflict is boiling, it’s heightening, and it is certainly something that is giving the perception that geopolitics in the Gulf are very tense and that there is a strong threat of conflict and stability being undermined. So, while the Yemen situation is worsening, while Iraq we’ve got a lot of unresolved issues with Islamic State, and other regional conditions, as a geopolitical analyst I’m not sure to what degree geopolitics is actually impacting the oil price.”