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How the situation in Afghanistan is affecting the oil and gas markets

The Taliban took over Afghanistan on Sunday when they flooded the capital, Kabul, while the US worked to remove all foreign dignitaries. Scenes of crowded airports and Afghan citizens clinging to an American bomber flooded the internet and news broadcasts on Monday.

The effects will be felt around the world, particularly in the oil and gas markets.

“The current situation in Afghanistan is deteriorating and affecting the oil and gas markets,” said Tim Snyder, an economist at Matador Economics. “Our markets, which relate primarily to the futures markets, rely on stability, risk assessment and of course market fundamentals.”

According to Snyder, market fundamentals are something most viewers see on the news every day, and it continues. When viewers witness the scenes from Afghanistan, there is a sense of concern that floats into the markets.

“The markets see this as a risk and add a premium or they could actually use it as a negative premium and actually push prices down,” said Snyder.

The last bastion of control between Iran and China, according to Snyder, was Afghanistan as it is in the middle. Even if the effects are not significant at the moment, they will continue to have an impact in the future.

“From a risk perspective, we continue to see these exposures come and go from the market, but for now we’re starting to balance the risk issues on the negative side, which accelerates downward growth, and that’s something that affects the overall productivity of a market “Said Snyder.

* Bloomberg contributed to this content

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