Justin Fox, Columnist

Texas Isn't Really the New Saudi Arabia

Tensions in the Middle East haven't had much effect on oil prices.

June 8, 2017 at 6:32 PM UTC

Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts. A former editorial director of the Harvard Business Review, he is author of “The Myth of the Rational Market.”

Trucking along.
Photographer: Matthew Busch/Bloomberg

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It is a time of crisis, or at least near-crisis, in the Persian Gulf. An alliance led by Saudi Arabia has cut ties with and blockaded neighbor Qatar, in part for being too friendly with Iran. Terrorists have struck in Tehran, and Iran's Revolutionary Guard Corps blamed the Saudis. The longtime protector/hegemon of the region, the U.S., has been giving conflicting signals, its leadership preoccupied with other matters back home.

You might think oil markets would be freaking out about all this. They're not. Oil prices are down about 4 percent since the Qatar news broke early Monday.

Explaining the short-term moves of the oil market (or the stock market, or the bond market) is generally a pointless endeavor. In this case, a U.S. Energy Information Agency report showing higher-than-expected inventories of gasoline and oil has gotten most of the credit/blame for the price drop.