Oil markets fluctuate due to threat of use of force on Iran
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  • The head of the Organisation of the Petroleum Exporting Countries (OPEC) warned on June 10 that oil prices would experience an “unlimited” increase in the event of a military conflict involving Iran because the group’s members would be unable to make up the lost production1. Iran, the second-largest producing country in OPEC after Saudi Arabia, produces about four million barrels of oil a day out of the daily worldwide production of close to 87 million barrels. OPEC however noted that reserves of oil were plentiful and that worries about scarcity were misplaced. It refused to concede to pressure for increasing supply2.

    In early July, oil prices experienced an unusual down-slide. Price of oil settled at $136.04 a barrel, a drop of $5.33, or 3.8 percent. Reasons responsible for the decrease included a strengthened dollar and President Ahmadinejad’s discounting the possibility of war with the United States and Israel, in remarks made to journalists in Kuala Lumpur. This relieved worries about Iran trying to block oil shipments in the Straits of Hormuz.

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