What would peace in the Middle East mean for the oil price?

The international conference convened in Baghdad for March 10 represents an important first step to finding a lasting solution to the chaos of Iraq since the US invasion four years ago. But if the Middle East can summon the political will to deal with this situation will this not cause a fall in the oil price?

This might be the price that the region has to pay for a new peace settlement. Certainly current oil prices above $60-a-barrel include a war risk premium that would bring prices down if it was removed.
It remains to be seen whether the political will exists between old rivals, and the US and its allies to pull off this kind of landmark shift in the status quo.

However, business planners are already trying to get their heads around what a peace settlement would mean for the region. This thinking should go beyond worrying about the short-term liquidity issues of a lower oil price, as investment levels would almost certainly be maintained by cash-rich regional governments.

The bigger picture is a much brighter one. For a peace settlement would open up a new world of investment possibilities across the Middle East, and those quickest to seize them could profit hugely by taking the initial risk.

AME Info