For many investors, it has been the dog that did not bark. Despite the violence in Syria and Iraq and the unfolding conflict in Ukraine, oil prices have failed to soar.
In fact, rather than jump, crude has done the opposite. The global benchmark Brent futures contract tumbled to a two-year low of $92 a barrel on 30 September, down from $115 in mid-June - hardly the response you would expect to instability in a major Middle East producer and the prospect of disruption to energy supplies via Ukraine to Europe.
The bigger story, and the one driving prices, is not scarcity of supply. It is, rather, an abundance of crude worldwide and fading demand from China.
In its latest report, the International Energy Agency (IEA), the consuming countries' energy watchdog, points to surging US production on the back of the country's shale revolution. American liquid petroleum output has surpassed its 1970 peak. Iraqi crude production, while lower, has not collapsed as a result of the military advance of radical Islamists across the country. Exports from Russia have been unaffected by the conflict in Ukraine.
Libyan output, moreover, is recovering. Indeed, it has partly offset a recent fall in Saudi Arabian production. Supply from the Organisation of Petroleum Exporting Countries (OPEC) has been "remarkably robust in view of the troubles in Libya and Iraq", says the IEA.
"If crude slides much more, the US output boom could soon turn to bust"At the same time, the agency has cut its forecasts for global oil demand growth for 2014 and 2015 to 0.9 million barrels per day and 1.2 million barrels per day respectively, to reach 93.8 million barrels per day in 2015. A weaker outlook for European demand, where economic growth is stuttering, along with forecasts of slower growth in China, has underpinned those downward revisions.
Add to that the impact of a rising dollar: the price of commodities denominated in the US currency, such as oil, tends to fall as the currency strengthens.
Expect more growth
So oil could fall further, especially if forward-looking indicators pointing to a slowing eurozone manufacturing recovery prove accurate and the resurgent dollar gains more ground. So then what? Will all those American shale wells become uneconomic? Fracking is an expensive business. And, if crude slides much more, the US output boom could soon turn to bust.
While that is possible, it still looks unlikely. First, in the longer term, there is still good reason to believe that emerging market demand for oil will continue to grow, underpinning prices near current levels. Overall global demand is still expected to rise next year, and faster than in 2014.
$92
The amount per barrel that Brent futures tumbled to on 30 September - a two-year lowAlso, the risks to Russian oil output are not so much now as in the future. According to Tony Hayward, former Chief Executive of BP, international sanctions against Moscow could turn around and bite the West by constraining oil supply years from now and pushing up prices.
Hayward has warned that cutting off capital markets from Russia's energy groups, which would eventually lead to less investment in Russian oil production, would be likely to damage long-term supply. Exploration projects in the Arctic with foreign partners - the next frontier for Russia's oil industry - are now on hold. The US shale boom is obscuring those longer-term risks to the supply picture and the global economy could be exposed to disruption to oil flows once the shale effect wears off.
Shrinking suppliesConsider, too, that supplies from Saudi Arabia, long the big 'swing' producer in OPEC, are likely to diminish over the coming years as the kingdom's domestic demand climbs. And, for all the talk of the shale revolution spreading beyond the US to Europe - with Poland seen as the test bed - nobody has found anything in sizeable quantities.
Finally, the longer the violence in Iraq continues, the less likely it is that Baghdad will be able to grow output to its targeted 2014 level of four million barrels per day.
So while oil may have further room to fall now, the future supply-demand balance looks tighter. The result, rather than a 70s-style price spike, could be a more gradual move higher, back above $100 a barrel. Do not expect too much in the way of savings at the petrol pump.