Energy companies’ experience of the early-1990s Gulf War suggests that any sudden increase in oil prices owing to a new Iraq conflict might be brief, since the market has become much more responsive to demand. However, current oil supplies are plentiful, according to a petroleum industry senior executive. Lower fuel consumption by airlines during the continuing recession and government oil stockpiling in anticipation of war should mean reasonable availability of jet-A.
“We might expect a sharp upward price spike, which would quickly dissipate [in any new war] once the oil-supply chain from other Arabian Gulf states had been secured,” said Paul Skinner, group managing director of Royal Dutch/ Shell. Nevertheless, early last month he warned delegates at The Economist global airlines conference in London that if production capacity was disrupted, higher prices might continue. “If there were a longer conflict resulting in more damage to oil facilities, this would, of course, exacerbate and prolong upward price pressures.”
More In FBOs
