Excess Supply Provides Buffer to Middle East Conflict: IMF

Global oil prices could spike on a further escalation of the Middle East conflict, but excess supply is providing a buffer according to IMF First Deputy Managing Director Gita Gopinath.

• “We’ve seen a serious escalation. Yes, we could have a severe oil shock, but we’re not there yet,” Gopinath said to Bloomberg.
• “We have supply, excess capacity, in Saudi Arabia. We have non-OPEC countries putting a lot more oil out on the market. So there are sources of supply that buffer these shocks, but if there is a large scale escalation in the Middle East, that is a problem,” she said.
• Fragmentation in global trade is providing upward global price pressure and “if this process continues it could lead to much more inflationary pressure.”