Unrest In The Middle East Will Lead To Oil Price Increases

By on August 20, 2013. Posted in , . Tagged as , , , , .

Unrest In The Middle East Will Lead To Oil Price Increases

Last week, The US Department of State issued a travel alert for potential terrorist attacks with special focus on travel in the Middle East and North Africa regions.

The State Department continues gathering information and its recent gathering suggests that al-Qa’ida continues to plan terrorist attacks.

Unrest in the Middle East is nothing new. It’s been going on for centuries, but relations in the region have gone through periods of relative peace and other periods of unrest.

In recent times, the Middle East has been the source of much of the world’s oil supplies. Whenever there has been unrest in the region it’s had an effect on oil prices.

In 2003, oil prices climbed after an attack on an Iraqi pipeline.

As momentum of the war in Iraq seemed to dissipate, oil prices continued to rise in 2003.

In 2007, oil prices climbed once again as fears of uprising in the Middle East grew.

Over the last few decades, oil prices have been significantly impacted by the political climate in the Middle East. The region has and remains the largest region for oil production in the world and when there is unrest it’s safe to assume oil prices will increase.

There are two major indicators of rising oil prices in the world.

The first is the unrest in the Middle East that seems to be a constant in the world today.

The second is the strength of the demand for energy throughout the world and that means an increase in demand for energy produced by oil.

Demand for energy produced by oil is higher than ever. Developing nations such as China and India are becoming some of the biggest energy consumers in the world. The two nations along with other developed nations in the world continue to use more energy than ever before in history.

For oil investors, increased demand for oil combined with unrest in the Middle East is an opportunity to invest in a hard asset to earn strong returns.

There is uncertainty in the stock market and other financial markets around the world. Investors are unsure how the world economies will react to more quantitative easing in the US along with other inflationary measures throughout the world.

As governments continue to devalue fiat currency, investors are feeling the pressure to move investments toward real assets like precious metals, oil and land.

Governments around the world, including the US government, have been living off debt for too long. They are selling the future to make payments that are due today. They are buying their own debt as a way to push the debt calls to future generations.

It’s a short-term tactic that will ultimately blow up.

Those stuck holding fiat investments will find themselves with worthless holdings while those that invest in real assets will maintain their value. Investors in real assets also stand to make gains on investments.

Unrest in the Middle East has been constant for centuries. In the last century, Middle East unrest has been an indicator of rising oil prices.

Combined the current unrest throughout the world and in the Middle East with increasing demand for energy and you have a great opportunity to invest in oil.

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