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What is driving the surge in crude oil prices—market fundamentals, dollar weakness, geopolitical tensions, or speculators?

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What is driving the surge in crude oil prices—market fundamentals, dollar weakness, geopolitical tensions, or speculators?

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A1: The short answer is all of the above, but to varying degrees. With respect to supply and demand fundamentals, despite recent evidence suggesting a decided tempering of demand growth in the United States and Europe, production outside of the Organization of the Petroleum Exporting Countries (OPEC) has been unable to keep pace with seemingly unrelenting demand growth, especially in Asia and the Middle East, thereby resulting in increased reliance on OPEC countries. With the notable exception of Saudi Arabia, even OPEC producers are producing at close to capacity. Consequently, when supply disruptions occur—be they acts of sabotage, weather related, or policy induced—there is little in the way of spare capacity to make up for the shortfall. For example, the sustained loss of Nigerian production earlier this year resulted in Saudi Arabia increasing its output last month, but at the expense of its own spare capacity. When a global imbalance occurs between production and demand, inventor

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