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Opinion

Middle East turmoil hands another victory to US oil producers

Kurdistan conflict could mar Iraq's reputation as a stable crude supplier

The oil fields of Kirkuk have been at the center of conflict in northern Iraq.   © Reuters

A surge in U.S. output holding down crude prices while OPEC restrains its own supply is not the only worry for the producers' group in its ongoing war with the shale sector. The increasing frequency of outages and threats to production due to regional and national geopolitical strife across the Middle Eastern and North African producer countries is chipping away at OPEC's credibility as a reliable supplier of crude to the world.

The "fear premium" injected into crude by a disruption or perceived threat to supply may occasionally benefit certain participants in the oil supply chain and speculative traders of oil futures who profit from price volatility. However, for crude buyers, it means rejigging procurement plans at the last minute and putting up with higher feedstock costs for weeks or even months.

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