The latest round of Middle East conflict is not expected to drive up oil prices. In fact, world oil prices are continuing to fall even as tensions rise between Saudi Arabia and Iran, according to a recent report by Reuters.
Oil prices slid more than 4 percent to new 11-year lows this week as the dispute between Saudi Arabia and Iran made any cooperation between major exporters to cut output even more unlikely, according to Reuters. "The furor over Saudi Arabia's execution of a Shi'ite cleric has stripped nearly 8 percent off the price of oil in the last three trading days, killing speculation that OPEC members might agree to production cuts to lift prices," the article states.
"There are rising stockpiles and the tension between Iran and Saudi Arabia make any deal on production unlikely," Michael Hewson, chief market analyst at CMC Markets, told Reuters.
"Evidence of slowing economic growth in China and India has meanwhile fueled fears that even strong demand elsewhere may not be enough to mop up the excess crude that has resulted from near-record production over the last year," the article continues.
Brent crude futures stood at at $35.07 a barrel on Wednesday, down $1.58 on the day, after reaching their lowest point since July 2004. In June 2014, the price was $115 per barrel. Reuters reports that falling prices have prompted some producers to pump more oil to compensate for lower revenues and to maintain market share.
"Adding to this oversupply, Iranian oil exports are widely expected to increase in 2016 as Western sanctions against Tehran over its nuclear program are lifted," the article states.
To read the Reuter's article, click here.