The price of oil seems to be suffering from a commodity market version of compassion fatigue. Like charity donors who begin to tire of images of suffering, crude oil traders seem to have become weary of tales of Middle East turmoil.
Even as the media reported the military successes of ISIS and held out the prospect of a brutal Islamic caliphate ruling over large oil-producing areas of Iraq and Syria, Brent crude has been on a downward slide, losing more than 10 per cent of its value since the beginning of June.
Behind that decline is a glut of crude in the Atlantic basin and weakening demand for oil in mature economies.
The International Energy Agency last week pointed to the oil slopping over storage tanks in the mature Western economies. OECD industry stocks in June registered their sixth consecutive monthly increase and the stock build in the second quarter of this year of 88 million barrels was the largest quarterly increase since 2006.
OPEC is pumping oil with abandon. Fearful of the return of Iran to the market, the Saudis are keeping the tap open in order to protect their market share from Persian attrition.
Meanwhile, says the IEA, American and European sanctions will have no short-term impact on Russian oil exports and we know that the protagonists in the current Middle East mayhem are all keen sellers: Iraq's southern export route is functioning; the Kurdish Regional Government has the support of Turkey to pipe oil from northern Iraq into the Mediterranean; and ISIS is reported to be selling captured Syrian crude, a means to fund its violent campaign.
The effect of all this, combined with the continuing growth in U.S. shale output, is to create a buyer's market for crude oil and the question is whether the weakening price is a result of short-term coincidence to be reversed next year, or evidence of an emerging longer-term trend of cheaper oil.
There is some reason to support the latter case and it is not just another plug for U.S. shale. The wider picture is one of dwindling demand.
According to U.S. Energy Information Administration statistics, total European consumption of petroleum has been in decline since 2005. The incremental effect of gains in automotive fuel efficiency, static or falling vehicle sales and the switch to natural gas and biofuels have taken their toll and led to a general reduction in energy intensity in the European economy.
If the recent stagnating euro zone GDP figures are any guide, the trend of weak or falling oil consumption in Europe is unlikely to reverse and could even accelerate. According to BP's Statistical Review of World Energy, European consumption of oil is back to levels last seen in 1967.
America's thirst for oil, too, has peaked, according to EIA figures. The big drivers of the world's increasing oil demand are China and the Middle East countries but the latter's rampaging growth in consumption is a direct consequence of the heavy public subsidy to energy prices in the Arab countries.
Meanwhile, the rate of increase in Chinese consumption is beginnning to slow as the economy matures and begins to adopt energy conservation measures. We should expect the trend to lower levels of energy intensity will continue as China shifts from an industrial towards a more service-oriented economy.
It is clear that economic growth is possible with static or falling oil consumption, good news to the world, if not for the oil-exporting countries, including Canada. Falling energy intensity in the world's major economies poses a huge challenge to energy commodity exporters and it will shape the geopolitics of the Middle East, where oil is beginning to lose its power as a political weapon.
Carl Mortished