Something had to give, and that something has proved to be the oil price. Its dramatic 20 per cent plunge reflects the reality of a new era in world oil, one defined by a resurgence of North American supply.
There is hardly a shortage of geopolitical risk these days. The Islamic State of Iraq and the Levant (Isis) has seized big swaths of territory. An undeclared war has broken out between Russia and Ukraine. There has been armed conflict between Israel and Hamas. Libya is in chaos. Uncertainty hangs over nuclear negotiations with Iran.
Yet the sum of these risks is trumped by the old-fashioned forces of supply and demand. While there may be a surplus of geopolitical risk in the world, there is an even greater surplus of oil.
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