The head of the American Petroleum Institute said Tuesday that surging U.S. oil production is the reason markets are shrugging off the growing tensions between key oil exporters in the Middle East.
API President Jack Gerard 's comments came as oil prices declined to around $36 a barrel, even though Iran and Saudi Arabia are locked in an escalating diplomatic dispute.
Gerard said in a Washington speech that “the geopolitics of energy have changed over the past decade” as new technology and techniques allowed the United States to almost double output to 9 million barrels a day.
As the unrest has continued to heighten, as the tensions increased, the market isn’t moving," he said. "The market is basically showing that there are alternatives out there for that energy."
Gerard also said that abundant oil from many alternative sources has taken out “a lot of the risk we have seen historically” in energy markets.
He added, however, that low oil prices have cut the incentive to invest in the energy industry, and you “can see already, today, some of the production being curtailed.”
Lower energy production could eventually put upward pressure on prices.