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Oil supply disruptions due to geopolitical turmoil are at a three-year high.
"More than 3 million barrels per day of oil supply have been taken off the market due to geopolitics," Citi analysts write.
"The bulk is from Libya insecurity and the Iran sanctions regime, but disruptions in Nigeria, Syria, the Sudans and Iraq add up to over one million barrels per day."
The good news is that this hasn't fueled any sustained spikes in prices. "Oil prices shot up initially following the invasions by the Islamic State for Iraq and Syria (ISIS) but are back at year-lows again," Citi noted.
There are big forces helping to keep prices down. Demand growth has been slowing with the global economy, and global supply has been bolstered by the shale revolution.
"Nevertheless, the growing violence in the Middle East presents acute geopolitical risks," Citi writes. "Will the US, as a global hegemon, respond militarily?"
Citi Research