Despite rise in Mideast violence, oil prices stay steady

The New York TimeNovember 21, 2012 

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American drivers filling up their tanks for the Thanksgiving weekend can forget about the impact of the Middle East on oil prices for a day or two.

Global oil prices bumped up and down Wednesday as diplomatic efforts to bring an end to the turmoil in Gaza faltered and then ultimately appeared to succeed. And after eight days of violence, most oil benchmark prices are little changed from where they started.

A rise in oil and gasoline prices during a Middle East crisis would come as no surprise, and there is no telling how long a cease-fire will last. But oil experts say there is little chance of a forceful price spike since Israel and Gaza are not oil-producing areas and global oil supplies are plentiful.

In addition, while Middle Eastern and many other oil-producing nations are pumping oil at unusually high rates, demand for petroleum products around much of the world has weakened because of the global economic slowdown.

“The global market is well supplied,” said Chakib Khelil, a former Algerian energy minister who also served as president of OPEC. “The stocks are pretty good, and the Gulf countries and Saudi Arabia are sustaining supplies while the weak economic situation in Europe is softening demand.”

Many analysts say that the global Brent crude oil benchmark price, currently around $110 a barrel, would be $20 to $30 lower if it were not for the persistent instability around the Middle East and North Africa, particularly the tensions surrounding Iran’s nuclear program.

Crude prices have shuddered up and down since tensions between Hamas and Israel spurred an exchange of rocket fire and bombs over the last week, as some traders feared a full-fledged war might bring Iran and other regional powers into the conflict.

But drivers in the United States have been minimally affected by the crisis, in part because a boom in oil drilling in North Dakota and Texas has decreased the country’s dependence on foreign oil.

The average price for a gallon of regular gasoline in the United States on Wednesday was $3.43, nearly 2 cents lower than a week ago and 24 cents lower than a month ago.

With the exception of temporary, localized problems, oil experts say the country is well supplied with oil and gasoline, despite an Energy Department report Wednesday showing that crude oil and motor gasoline inventories declined moderately last week.

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