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Middle East “Becoming Much More Unstable”: Oil Prices to Rise When Iran Sanctions Hit Next Month

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Falling oil prices, Europe's rolling crisis plus myriad problems here at home have caused many Americans to turn their attention away from developments in the Middle East.

"But rest assured...problems in the Middle East are real and are getting larger," says Ian Bremmer president of Eurasia Group. "The region as a whole is becoming much more unstable [and] sectarian conflict is growing."

Bremmer cites a laundry list of regional concerns, including the latest uprisings in Egypt, uncertainty over the Saudi succession plan, civil war in Yemen, and state-sponsored bloodshed in Syria potentially spilling over into Lebanon. "I can keep going," he says, without humor or irony.

Then there's potential for conflict with Iran, now that talks over its nuclear program have reportedly broken down.

"There never was great likelihood these talks would work," Bremmer says. "The likelihood talks formally break down and we get expanded energy sanctions against Iran is actually quite significant. When that happens, you have to expect oil prices will go back up on that news."

Still, most experts believing the risk of a military strike against Iran before the November elections are quite low. On Wednesday, crude fell to its lowest level in eight months after the Energy Department said U.S. crude supplies rose to the highest level in 22 years. (See: Look Out Below! Major Crude Oil Crash Is Coming Says Analyst)

"I suspect the Middle East is not going to play a very big role in our headlines over the next few months," Bremmer says, suggesting unrest in the Middle East generally is more of problem for people in the region and energy consumers in Europe and Asia than it is for the U.S. directly.

That's in part due to increased energy production in the Western Hemisphere, which is becoming much-less dependent on OPEC, as discussed here with Daniel Yergin. In addition, the global economy is much weaker now vs. late 2011, when fears of a conflict with Iran were cited as a major contributor to rising prices. (On Wednesday, the Federal Reserve lowered its forecast for U.S. growth yet again.)

Going forward, Bremmer believes the U.S. is going to take an increasingly less-active role in the Middle East, as discussed here and detailed in his latest book: Every Nation for Itself: Winners & Losers in a G-Zero World.

Considering all the blood and treasure America has spilled in the region, that'd be a welcome development -- and a 180-degree turn from U.S. foreign policy since WW2.

Aaron Task is the host of The Daily Ticker. You can follow him on Twitter at @aarontask or email him at altask@yahoo.com

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