FlyerTalk Forums - View Single Post - Situation in the Middle East and possible implications for BA
Old Jan 3, 2020, 6:24 pm
  #11  
Jagboi
 
Join Date: Feb 2009
Location: YYC
Programs: BA bronze, Aeroplan peon
Posts: 4,735
Originally Posted by mnhusker
Any spike in oil prices will be tempered by the fact that the United States is now the worlds leading oil producer, with the ability to produce more if needed.
This will keep any price increase in crude mild.
Iran produces 20% of the worlds crude oil demand, the US can't step up production to meet that demand if Iran was blockaded. The nature of the US oil reserves is very different than those in the Middle East as well, the rock is of much poorer quality, so the wells tend come on strong initially and decline quickly. The Middle East oil is much easier to recover and the decline curve is very gradual. The wells in the Middle East can have production ramped up quickly, the US wells much less so.

Saudi Arabia could make up the extra production, certainly in conjunction with Russia, but depending on what happens next Saudi may not be able to export any extra oil they produce, or if there is another attack on production facilities their output might be reduced as well.

Historically we know that instability in the Middle East ( or more than usual instability) will push oil prices up, and that will certainly affect all airlines.
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