an “Iranian premium”—concern over whether stalemate and confrontation over Iran’s nuclear program would lead to conflict and threaten oil flows through the Strait of Hormuz—became an additional element in a higher oil price. Two further factors drove prices to unprecedented levels. One was a dramatic increase in the costs of developing new oil and gas fields—more than doubling between 2004 and 2008. This arose because of shortages—of skilled people, equipment, and engineering capabilities—combined with a rapid rise in the price of other commodities, such as steel, that are required to build
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