MARKET ANALYSIS OIL MARKET REGULATIONS
BALANCING THE OIL MARKET BETWEEN TRADITIONAL AND NEW REGULATORY POLITICAL RISK
ANALYSIS of markets, energy markets no less than others, often begins with a look at the fundamentals. In energy markets these analyses tend to change, move and require constant updating. International politics, on the other hand, while widely regarded as chronically fickle, have rarely required a deeper analysis of its fundamentals. The fundamentals of the global economy and politics have, for many decades, proved to be fairly stable. Yet for several years it has become widely appreciated that global politics are becoming increasingly unstable and that the values and conventions steering international relations in the past decades are under pressure. One can argue about the key causes, but one way of looking at it is that the set of main actors and their internal weighing has changed, making some feel constricted by the old space allocated to them within the system. Others have
shrunk and look for new means through which to attain their goals. This all leaves us with a global system in which competition and aggressive positioning is playing an increasingly important role. Nowhere has that been as clear as in the Middle East, where the US’ efforts to pivot away over the past decade has given rise to a number of conflicts-byproxy and raised traditional political risk for the oil market to levels not seen for long during 2019. But while much of the world politics is moving away from the established norms of the rules-based order, a new type of political risk rises in prevalence in the developed economies and climate change mitigation comes into focus. In this context, the EU’s strong identification with a rules-based international order and multilateralism – the core of its foundation – stands out and likely will lead to an escalated EU-US political decoupling – although
not necessarily all the way. But it also underlines to what extent this will be the EU’s trademark as a bloc in global trade and policy, to approach international problems with regulations and transparency to leverage considerable so-called soft power. All this could happen faster or slower, depending on November’s presidential elections in the US, but the overarching momentum has already been created. As many have pointed out, it has been in the making since it was becoming apparent that China was on its way to outgrow its position within the established geopolitical system. As that has happened, the US has started to feel more constrained then helped by its position in the system. This position has kept sucking it into conflicts where it has little national interest, while keeping it from being able to redistribute its resources to where it most needed. For markets, and European energy PAGE 37