ARI SHAPIRO, HOST:
War broke out in the Middle East, but unlike in decades past, there has not been panic about a subsequent oil crisis. NPR's Camila Domonoske is here to explain why.
CAMILA DOMONOSKE, BYLINE: Immediately after Israel attacked Iran, crude prices did shoot up, but only by about 7% over a few hours.
REBECCA BABIN: We saw a lot of people kind of react to that, saying why isn't crude reacting more? This is a real risk.
DOMONOSKE: That's Rebecca Babin, a senior energy trader at CIBC Private Wealth. She says traders like her responded conservatively, in part because of recent experience with Ukraine, Gaza, other attacks.
BABIN: Throughout all the other geopolitical events that have happened over the last several years, we get these spikes, and then supply is not impacted and they revert very quickly.
DOMONOSKE: And that's exactly what happened again. Prices were volatile, but the spike was short-lived, and that was partly because of the specifics of this conflict. Once again, supply wasn't impacted because oil wasn't targeted. It kept flowing. But there's also some global factors behind the quick recovery. Angie Gildea is U.S. energy lead for the accounting giant KPMG.
ANGIE GILDEA: You know, we are in a period of time right now within the energy markets where we have a bit of an oversupply.
DOMONOSKE: The world just has too much oil. Supply is growing faster than demand. We're making more than we need. Then there's a big overarching geopolitical transformation. The shale revolution in the United States has lessened the world's dependence on Mideast crude. Over a decade ago, new technology like fracking unlocked American oil fields. Jim Burkhard leads crude oil market research at S&P Global.
JIM BURKHARD: The U.S. is the biggest oil producer in the world by far. The impact on the oil market is profound.
DOMONOSKE: The U.S. makes a lot of oil and could make even more. So the U.S. is less reliant on the Middle East, and the rest of the world has backup supplies if it needs them. But of course, right now, the world doesn't need more oil. Quite the opposite. So while this week, President Trump repeated his call to drill, baby, drill, Burkhard says...
BURKHARD: We think - we've been saying for the last few months we think U.S. oil production is going to decline.
DOMONOSKE: Because the market is telling companies to drill less - to chill, baby, chill.
Camila Domonoske, NPR News. Transcript provided by NPR, Copyright NPR.
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