Oil prices hit close to $62 per barrel during Monday’s trading following the beheading of 21 Egyptians by the Islamic State in Libya. Egypt bombed ISIS targets in Libya following the beheading and stated in a military statement that “Avenging Egyptian blood is a national imperative.” Libya’s oil production has been greatly stagnated, falling to about 350,000 barrels a day, far short of the 1.6 million barrels per day the country produced only four years ago. Iraq’s oil output has also slowed in recent weeks, further complicating the supply chain.
In an entirely not surprising statement, Kuwait’s oil minister said that oil prices would continue to rise while supply drops. The price of Brent crude is over 30 percent higher since the start of 2015, where it began at $45.19, the lowest price in nearly six years.
Russian Regression
Fighting in the Ukraine and a very fragile ceasefire in the region has also put a financial strain on the Russian economy. The ruble has plummeted 44 percent in the past year and a drop in the country’s consumption which accounts for close to half of the country’s economy and will bring the country into further recession. Russian’s Economy Ministry predicts a drop of at least 9 percent in real wages in the country in 2015, when there was only a 1 percent drop in real wages in 2014.
There is no question that even if the ceasefire holds (which itself is questionable right now), economic stability in the region will likely take even longer to restore than political stability.