Middle East Crisis Puts Energy Center Stage
By John Persinos
Oil is a leading cause of war. According to a recent study, between one-quarter and one-half of interstate wars since 1973 have been linked to oil. The latest headlines do not contradict these findings.
This week, intensifying violence in the Middle East has put energy markets into the spotlight. Let's step back and examine the unfolding dynamics of the oil, gas, and renewable energy industries and where investors can place profitable bets.
The oil market in the second half of 2024 is marked by significant volatility and uncertainty, driven by geopolitical tensions, supply chain disruptions, and shifting demand patterns. Despite the global push towards renewable energy, oil remains a critical component of the energy mix.
Military strife, particularly in the Middle East and Eastern Europe, continues to impact oil supply and prices. Conflicts and political instability in major oil-producing regions have led to supply disruptions, causing price fluctuations.
These geopolitical developments present both risks and opportunities. Supply disruptions can lead to short-term price spikes, offering opportunities for traders to capitalize on price movements.
Crude oil prices spiked Wednesday after Israel assassinated Hamas's political leader on Iranian soil, prompting threats of retaliation from Tehran. World leaders are expressing the fear that the region stands on the cusp of all-out war.
The worsening conflict in the Middle East, combined with record U.S. oil demand due to the resilient economy, has generated bullish tailwinds for oil prices (see chart).
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