The oil and gas risk premium is back

After nearly three years in which geopolitical tensions have barely affected the pulse of the market, the last few weeks have seen a risk premium being built into the oil price. If this trend continues, it will have the potential to boost LNG prices After nearly three years in which geopolitical tensions have barely affected the pulse of the market, the last few weeks have seen a risk premium being built into the oil price. If this trend continues, it will have the potential to boost LNG prices.
By Peter Stewart 19 April 2017 0 25530
A Canadian oilsands refinery. OPEC production cuts and global political issues mean the supply of oil is starting to tighten. (Nexen)

Geopolitical risk is back on the agenda for energy commodities. North Korea, Syria and Afghanistan have been the main targets of a more assertive American foreign policy. President Donald Trump’s quick-fire actions have also fuelled concern a fresh round of US sanctions on Iran may be imposed sooner rather than later. Meanwhile, the potential for instability in Venezuela and Turkey is also rattling the market.

In recent months, the huge stockpiles of oil held around the world have eliminated the geopolitical risk premium that has dominated...

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