The day the coalition around Saudi Arabia announced a cut of diplomatic relations with Qatar, risking the “koweitisation” of the latter, the oil prices… collapsed. This is not the first time we have noticed that outbreaks of conflict are no longer causing price surges. This fact validates the axes we have been following for a long time in our anticipation of the oil-market: energy (renewable energies, gas, nuclear) and economic transitions (e-economy, less energy-consuming) have definitely dethroned King ‘Oil’ who no longer calls the shots and whose value is henceforth limited to the princes’ capacity to agree among themselves on output volumes (OPEC and NOPEC cooperation). Rising tensions between Saudi Arabia and Iran are forcing the markets to question the solidity of the deals between producing countries, conveying risks of re-increasing production thresholds and consequently translating into an immediate decline in prices. This is of course good news, inducing fewer reasons to make war. Unsurprisingly, our team therefore anticipates that the period of tension around Qatar is likely to cause downward pressure on prices… but the situation will recover as soon as the leads of resolution emerge, with prices rising towards $50/barrel again. They could even slightly exceed that if the crisis in the end serves as a strategy for strengthening regional and sub-regional cooperation.
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