Why Oil Markets aren't Reacting to the Attacks on Tankers in the Persian Gulf
by Samantha Gross, Fellow, The Brookings Institution
The first four tanker attacks occurred on May 12, in the Gulf of Oman near the United Arab Emirates port of Fujairah. There were no injuries to the ships’ crews or spills of oil or other materials. An international investigation found that the attacks involved limpet mines attached to the ships’ hulls and that the attacks were designed to disable the ships, not destroy them. The investigation pointed to the involvement of a “state actor,” but did not mention Iran by name, although both Saudi and U.S. officials pointed to Iran as the culprit.
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Oil markets have reacted to these events with a shrug and a yawn. ___________________________________________________________________ |
Why has the market reaction been so muted? For the past several months, oil prices have been experiencing a tug-of-war between opposing sentiments—geopolitical concerns and economic concerns. On the geopolitical side, instability and falling oil production in Venezuela and Libya have put upward pressure on oil prices, along with the full implementation of sanctions on Iranian oil production. At the same time, economic concerns are putting downward pressure on oil prices. Economic growth in China is slowing and the world is concerned that the current U.S. trade war with China will expand and drag down the global economy.
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