Global stock markets are rattled as the President of Turkey, Recep Tayyip Erdogan, runs his economy into the ground raising contagion fear surrounding other European nations. Initially, oil was following the stock markets down but turned positive on a report from the normally more bearish leaning International Energy Agency (IEA) warning that as oil sanctions against Iran take effect, perhaps in combination with production problems elsewhere, maintaining global supply might be very challenging and would come at the expense of maintaining an adequate spare capacity cushion.” The IEA also raised their demand forecast for next year.

So, the oil market must balance the risk of shortages if the global economy does not fall apart, or a well-supplied market if it does if it falls apart. I guess for oil, it is picking your poison.

Suggesting that increased production from OPEC and Russia was providing some calm, but as Iran sanctions start to set in, that could just be the calm before the storm. The IEA said that concerns about the stability of oil supply have cooled down somewhat, at least for now.

We have seen increases in production, mainly in Saudi Arabia and Russia, a surge in U.S. exports in June that saw a record weekly average level of 3 mb/d, and a partial, but fragile, recovery in Libya. Ample supply has contributed to the Brent price falling from just over $79/bbl at the end of June to below $72/bbl earlier this week. This cooling down in prices is clearly welcome for consumers. The biggest single product market in the world is U.S. gasoline and the national average price increase seen during the spring seems to have stalled for the time being.

Yet, warning about growth from the International Monetary Fund (IMF) and the IEA and now Turkeys economic problems could cause more problems for Europe. Sky New reported that Turkish President Recep Tayyip Erdogan has brushed off the plunging value of the lira and a rift with the U.S., telling Turks: “If they have their dollars, we have our people, our God.” Turkey’s currency hit a record low against the U.S. dollar and euro early on Friday, falling around 7% against the dollar after initially losing 12%. Markets are worried about a deepening fallout between Washington and Ankara over the detention of U.S. pastor Andrew Brunson on terror charges, as well as other issues according to Sky.