Since 2011, oil prices have traded in a narrow band of around $100 per barrel in spite of a series of disruptions that in another era would have triggered significant price spikes. In Libya, rebels took over the government of the fifth-largest holder of proved oil reserves in the world. An anti‑government uprising in Syria shut off more than one-twentieth of global oil production. South Sudan lost one-third of its oil production to fighting that damaged its oil wells.
Commodity markets are repeatedly shrugging off shocks for a simple reason: The world is oversupplied with everything from crude oil to coal to natural gas, everywhere from the United States to China to Siberia.
But it would be a mistake to be lulled into a false sense of security. Behind this benign excess, the commodity trading environment is changing radically, introducing new challenges and opportunities for traders, industrial companies, and consumers worldwide. In our view, these new trends could potentially spark market disruptions, higher levels of commodity price volatility, and fundamentally alter the way commodity trading markets work in the future.