Arab Spring and crude oil prices

Algeria hostage crisis has finished with death of 23 hostages and more than 30 terrorists.
This crisis was not caused by the Algerian domestic factor. The terrorists aimed to stop French intervention into the northern Mali dispute. That means similar crisis is likely to occur in anywhere in the oil field in Middle Eastern nations that have poor security situations. Therefore the crisis supports the crude oil market.

On the other hand, the dispute in Mali is said to begin after rebels were trained practically and obtained weapons through the Libyan civil war in 2011. So the Libyan civil war caused the Algerian hostage crisis indirectly, and the Libyan civil war was triggered by the Arab Spring started in late 2010.

The Arab Spring democratic movement defeated corrupt and authoritarian regimes in Libya, Egypt, Tunisia and other Arab nations, however, those countries have not recovered stable society yet. Muslim extremists are expanding their affect in the region.

Let's take a look at crude oil price movements before and after the Arab Spring period.
Crude oil prices declined to below $40 per barrel after the Lehman shock capped the historical price surge during 2007 and 2008. Then the US quantitative easing lifted crude oil prices toward $80/bbl but the market failed to rise further.

Later, crude oil prices did not influenced much by the QE2, however, started rising in step with the Arab Spring and reached to $100/bbl when the Libyan civil war broke.

Although crude oil prices fell following the cease of Libyan civil war, the Syrian dispute and the Iran sanction have continued to sustain oil prices above $80/bbl.
Middle Eastern geopolitical situation certainly has been a more important factor for the oil market after the Arab Spring.

However, only Libyan civil war actually affected global crude oil supply significantly. Iran sanction gave buyers sufficient time to seek alternative supply, and the Syrian dispute has not hamper crude oil supply. Turmoil in Egypt or other nations also did not affect major crude oil supply stream.

We can see that even wars in Iraq or Libya did not destroy major crude oil production facilities because output in these nations rebounded soon after the cease.

An actual influence on supply by terrorists attack on each oil or gas field such as the recent Algerian hostage crisis is likely to be negligible.

We have been watching news about the Syria turmoil for long without judging the fairness. Many market participants are influenced psychologically despite the dispute does not affect crude oil supply. We might have to think why the Arab Spring has started.

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