With a tight global oil supply, Islamic militants threatening to disrupt oil in Iraq, the possibility of strong sanctions (or even war) against Russia, and other global tensions you would expect the price of oil to go through the roof. Instead it’s fallen from recent highs and is on par with year-end 2013 prices and volatility is approaching historical lows. According to Goldman Sachs head of global commodities research Jeff Currie it was only a matter of time before industry figured out a way to insulate itself from geopolitical instability.

“Either the technology or the politics had to change in order to create new supply. Think of it as a race between the engineers and politicians, [and] the engineers won,” writes Currie.

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US no longer the marginal oil consumer

When Currie says that the engineers won, he’s primarily talking about new techniques to make shale oil economical, turning the US from a major net importer and the world’s marginal oil consumer to a net exporter. Since Brent crude is usually quoted in dollars the changing role of the US in oil markets helps to stabilize prices, and that change will only become more pronounced if the oil export ban is lifted or if more exceptions are granted in the future. Brent crude prices in India and Indonesia, for example, have responded to recent events even as global spot prices have remained calm.

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Political obstruction to oil supply also changing, says Currie

Stable oil prices, which Currie expects to go structurally lower in the next few years, also put pressure on governments to fix the political problems that contributed to volatility in the past. This won’t help situations like the war in Iraq, where a weak and divided government is a major part of the problem, but there are signs that natural resource protectionism is starting to fade.

Currie points to Russia reducing its petroleum-related taxes, Mexico working to reform its energy industry, and the US allowing Chinese capital to play a role in its energy sector (after blocking the sale of Unocal nine years ago) as clear examples that governments are more willing to cooperate with foreign companies.

“This is particularly the case for the end of natural resource protectionism, which should open investment opportunities not seen since the 1960s,” says Currie.