The post-financial crisis: Oil with less risk?

Authors:
Luis Alberto López Rafaschieri and José Alberto López Rafaschieri
www.morochos.net

In theory, oil prices should be back to higher levels with the recovery of the global economy, as happened after the US recession of 2001 and 2002. Nonetheless, in the world of post-financial crisis exists, for now, a political environment that could lead to different consequences in the energy market.

Oil prices hit their highest levels during the years 2003 to 2007, coinciding with a very peculiar international scenario: The war to invade Iraq was initiated and this became an absolutely unstable country, Venezuela was suffering a serious political turmoil, Correa and Morales (left-wing extremists) began their presidencies in Ecuador and Bolivia respectively, and Israel launched a severe military attack on Lebanon with unpredictable repercussions. Facts that directly involved important oil-producing regions, so it could be presumed that they contributed to the sharp upward movement in prices.

In contrast, today the international scene is less volatile in the oil-exporting centers, although this does not mean that instability will never resurface. But while this climate of reduced risk remains unchanged, oil prices might not react to economic recovery in the same way as they did during the boom period 2003-2007.

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