Answer to Question #51996 in Finance for Ehtesham

Question

Hi.

Is it a fact that producing insecurity and conflict in the Middle East would cause oil prices go up?
If yes, how does it work?

Thank you.

Answer 1

Production insecurity and the military conflicts in the Middle East are the factors, which decrease supply of oil, which is extracted there. The decrease in supply will cause the shift of the supply curve to the left, and this will cause oil prices go up.