Yergin: Oil Prices Becoming Decoupled

“Oil prices are becoming increasingly decoupled from the fundamentals of supply and demand,” Dr. Daniel Yergin, chairman of Cambridge Energy Research Associates (CERA), said today in Washington D.C. “With prices over $90 a barrel and strong anticipation of $100, the oil market is showing signs of high fever, stoked by fears of clashes in the Middle East and resulting disruptions of supply. A weakening dollar and anticipation of further weakness add further fuel to the fever,” he said.

Dr. Yergin spoke at a symposium on “The Economics and Geopolitics of Russian Energy” at Georgetown University, sponsored by the university’s Center for Eurasian, Russian and East European Studies.


“What we’re seeing in the oil market today is rooted more in the cauldrons of geopolitics and the impact of financial markets, expectations, and psychology than in supply and demand,” he said, “but these are real factors.” He pointed to major impact over the last two weeks of tougher rhetoric over Iran’s nuclear program and heightened tension between Turkey and Iraq.

“The oil market may be only one or two events away from $100-plus oil,” he said, “and there is much momentum in that direction. The major offset would be in the economic sphere