Washington is trying to drive down prices by flooding the market with crude but risks collateral damage to its own shale industry.
Imagine that at the start of 2014 you were an investor who liked to dabble in the commodity markets. You could sniff something going seriously wrong in Ukraine and you were alarmed by early reports of groups of militants marauding across northern and western Iraq.
With hopes that the global economy would continue to strengthen, the smart money would have been on oil prices continuing to climb. That’s what geopolitical tension plus robust demand usually means.
On this occasion, though, the smart money was wrong. After standing at well over $110 a barrel in the summer, the cost of crude has collapsed. Prices are down by a quarter in the past three months. More oil has been pumped at a time when the global recovery has faltered, with traders caught unawares by the slowdown in China and renewed stagnation in the eurozone.
This article was written by Larry Elliott for The Guardian on November 10th, 2014. Larry Elliott is the Guardian’s economics editor and has been with the paper since 1988.
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