On July 1st, the Crude and Brent oil tumble made headlines in the financial world. Brent oil lost 68 cents on its regular trading price, while Crude oil went down 41 cents. This is one of the biggest tumbles in the history of these trades, so it’s no surprise it has caused concern for the future of oil trading.
How Wars Impact Investments
The reason behind the tumble: the ever changing policies regarding oil exports in Iraq. The newly-built pipeline connecting northern Iraq to Turkey will make exports to the west a lot easier, effectively doubling the current daily exports to reach an impressive 400,000 barrels per day. This impressive move has had another effect: a chance for the market to level off profits as Iraq moves from a war-ravaged country towards a financial oil powerhouse.
In fact, according to Reuters, much of the initial fear that raised prices was due to the threat of fighting hurting exports by closing out routes and splitting the country in a way that would hurt the oil industry. This was worsened by reports of insurgents fighting to take over Iraq’s largest refinery, followed by news of Iraqui troops deploying to the area to control the movement.
But as days go by and the threat of violence eases, things are beginning to stabilize and prices starting to drop. According to Reuters, the first week of July saw the end of a nine-month high raise that brought the price of a single barrel to $115.71.
Returning to Invest in Oil
Now that fears are receding, the chances for a profitable investment on Crude and Brent oil are high again. Oil-related stocks have been in decline and reached record low prices, making them an ideal investment. On July 4th, Reuters reported that Brent futures were down to $111.07 a barrel, a rise of 7 cents over the low price reached just a week before.
While these numbers do not make current investors happy (they would sell at a major loss if they choose to move stocks now), it could be a great answer for those looking to get into the market. With conflict easing in Iraq, prices are set to go up in the near future, so any current investment is likely to produce significant profits.
Whether you’re a beginning, small investor or one looking to put down significant amounts of money, the Crude and Brent oil tumble might be a sign that you should be looking into oil to expand your horizons.