Conflict in crude oil hotspots drives prices up on a wholesale and consumer level. One way prices are effected is that while oil/gas demand is always on the rise, supply goes down when a country must re-focus its politics and resources on war instead of its number one export. Supply in Iraq was much higher before US invasion in 2003.
Oil traders account for low supply and unpredictability when they set prices for future oil shipments. Conflict and political instability is a huge factor in the price index. In the case of the Iraq war price was driven up more than $10 a barrel.
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