The relative calm in global oil markets, despite tensions in Ukraine, Libya and Iraq, is beginning to unnerve the International Energy Agency, which has detailed how these risks could spark a price change for the commodity.
"Oil prices seem almost eerily calm in the face of mounting geopolitical risks spanning an unusually large swathe of the oil‐producing world," the organization said in its new monthly report published on Tuesday morning, adding that was providing an "uneasy comfort."
Brent futures prices have fallen to back below $105 a barrel in recent weeks and WTI has slipped below $98 a barrel. The IEA say that this has been due to weak demand in the last few months and an oil glut - including good supply in the Atlantic basin - helping to keep a cap on prices.
Lowering its forecast for global oil demand growth for 2014, to 1.0 million barrels a day (mb/d), the IEA say that events in Iraq could have the greatest potential impact on prices. The U.S. military has conducted an airstrike on Islamic insurgents in Iraq, called IS, which has taken control of large parts of the north of the country.
The growing toll of Islamist forces on northern production, signs of cracks in KRG (Kurdish Regional Government) defenses and the evacuation of staff from oil facilities are "worrisome developments", according to IEA. However, it believes that infrastructure bottlenecks in the south of the country could be be more troubling for Iraq's overall supply growth rather than the humanitarian disaster in the north.
Elsewhere, U.S. and EU sanctions against Russia are having little effect on the oil market, it added. Short‐term supply disruptions do not seem on the cards and sanctions are expected to trim Russian demand, it said.
"The consensus in the industry seems to be that neither set of sanctions will have any tangible near‐term impact on supplies," it said in the report.
Likewise in Libya, a deteriorating security situation isn't believed to be able to unsettle prices and blockaded crude export terminals - which have now come back online - may matter more to the market as a downside risk.
"The Atlantic market is currently so well supplied that incremental Libyan barrels are reportedly having a hard time finding buyers," the IEA said.
Global oil demand growth is set to accelerate to 1.3 mb/d in 2015 as the economy improves, the organization said.