21/02/2012 09:41 GMT | Updated 22/04/2012 06:12 BST

Oil Instead of Euro to Fuel Fears?

The financial sector is preoccupied with the potential break-up of the eurozone. Yet the dramatic developments in the Middle East and North Africa (together called MENA) could lead to turmoil in the markets. Oil prices have been hovering near dangerous levels for quite some time. Prices could easily break out to the upside. This would be very bad news indeed for the foundering global economy.

Events in MENA could provide oil prices with the final impetus for prices to break all records. The civil war in Syria and the tensions surrounding Iran's nuclear intentions are symptoms of broader geopolitical shifts. The wide-ranging political earthquakes we have seen in the MENA region have fostered insecurity throughout 2011 and there are no signs that things will quiet down in 2012. For decades, the political landscape remained fairly stable but now fissures have opened up all over the place. Alliances are no longer clear. Not so long ago the authoritarian Arab monarchies sided with the West. Countries such as Saudi Arabia, Qatar, Jordan were staunch US allies. That is still largely the case but whereas it used to be possible to gloss over tensions between geopolitical/economic interests and democratic principles/credibility, following the Arab Spring it is harder for the West to endorse autocratic regimes. Leaders in Washington, London, and Berlin fear they might shoot themselves in the foot by doggedly supporting incumbent regimes.

Events in Egypt are a prime example. The Americans did not drop Mubarak until the revolution was well underway. This didn't exactly endear Washington to many Egyptians. Since then, the situation has become even more awkward for the Americans. The (supposedly) temporary military government recently cracked down on a number of NGOs including several US institutes that maintain close ties with Congress. Some US lawmakers are arguing in favor of blocking military aid to Egypt and the bilateral relationship between the US and Egypt is increasingly strained.

The US would like to see a stable world order with free and open international trade routes and assured energy security. It also wants to remain the dominant player. To this end it needs to prevent the ringleaders in the Middle East - especially Israel, Saudi Arabia, and Iran - from going for each others' jugulars while keeping its rival superpowers at bay. China and Russia have a vested interest in maintaining the status quo but both countries are also trying to expand their sphere of influence. To counter this, the US gradually shifts the focus of its military apparatus to Asia. This is one reason why the Americans are keen to leave Iraq and Afghanistan even though conditions in these countries are far from stable. The latter means states like Iran and Pakistan have a lot of opportunities to get a finger in the pie. Of course this is no good to the Americans. Ergo, they are caught between a rock and a hard place. These are but a few examples of the crisscrossing wires in the minefield of international relations.

Every country in the volatile MENA region (plus the other states that are somehow involved) has a different political, military, geostrategic, economic, diplomatic, and energy agenda. This leads to continuous clashes. Not just between nation states but also within the countries themselves. In recent decades, the regional and global superpowers had found a balance that allowed them to maintain the status quo. The Arab Spring put an end to this as did the US withdrawals, the emergence of Turkey, the more vocal stance of the small Gulf states, and the Iranian nuclear shenanigans. Old paradigms end up in the dustbin of history; the strategic map of the region is constantly redrawn. Meanwhile, alliances that were taken for granted are crumbling as tough regimes turn out to be weak as water and strategies that were thought to be bulletproof are riddled with holes.

None of the participants in this 'game' really knows whether they are coming or going. An outright military confrontation between the West and Iran is not that likely but all other options are open. Nobody knows how the strategic repositioning of the actors involved will unfold. Numerous scenarios are possible; instability and uncertainty are spreading. A minor trigger could push oil prices to new records. The global economy is very vulnerable at the moment. No country will thrive if oil prices soar. Such a rally will stymie all chances of a sustainable recovery. For this reason I do not believe any country will deliberately drive oil prices skywards. However, as indicated above the probability of misunderstandings, miscalculations, unpleasant surprises, and unexpected conflicts has increased. At the same time, the oil price chart shows the potential is there for a break-out.