Oil Can Still Protect Against a Middle East Blowup. Here’s How to Play It.

Oil isn’t the hedge against Middle East turmoil it used to be. That doesn’t mean investors shouldn’t own crude for a little extra protection against a wider conflict.

Futures tied to the U.S. price of crude oil spiked to around $86.50 barrel on Monday, from near $83 on Friday. That gain reversed over the next few trading days, with oil back to $83 a barrel by Thursday—meaning no additional premium for the events of the past week. Nonetheless, oil could make sense as a hedge against geopolitical risk. Tragically, the fighting between Israel and Hamas is likely to result in significant bloodshed. Iran, Lebanon’s Hezbollah, and other regional powers may feel compelled to respond. Enough escalation may even draw the U.S. into the conflict. Long-term dynamics aside, the market’s knee-jerk reaction will be to send oil prices sharply higher the morning after the next bit of bad news from the Middle East.

For investors, buying oil here is a trade with asymmetric near-term odds. On the one hand, oil is unlikely to fall below $75—supported by the same supply/demand dynamics that have kept the price above that level for most of 2023. But a spike to $100 a barrel is in the cards if the fighting escalates. That’s a potential upside of around 20% from Thursday’s $83 a barrel, but downside risk of less than 10%.

United States Latest News, United States Headlines

Similar News:You can also read news stories similar to this one that we have collected from other news sources.

Crude Oil Forecast: Threat of Broader Conflict, Sanctions Spooks Oil MarketsFriday the 13th witnessed a surge in oil prices ahead of the weekend as Israel threatens to take the war to another level. The Israel-Hamas set to intensify
Source: DailyFX - 🏆 305. / 63 Read more »

Oil spikes after US issues sanctions against Russian price cap violatorsBreanne Deppisch is an energy and climate policy reporter at the Washington Examiner. A former national political reporter, she has closely covered campaigns, Congress, and the White House since 2016.
Source: dcexaminer - 🏆 6. / 94 Read more »

Israel-Hamas War Likely to Spark Oil Price 'Volatility'Oil prices are expected to surge if the war between Israel and Hamas continues to escalate, and energy costs could skyrocket if Iran officially enters the fray, experts warn.
Source: NEWSMAX - 🏆 16. / 71 Read more »

How to Protect Yourself From Student Loan Scams as Bills ResumeAs borrowers gear up for federal student loan bills resuming this fall, they face a revamped landscape that includes a new repayment plan, servicer switches and long call wait times. Another imminent concern: scammers who want to take advantage of the moment.
Source: KJNBNews - 🏆 526. / 51 Read more »

DARPA Seeks to Protect Virtual Reality Against 'Cognitive Attacks'Science and Technology News and Videos
Source: futurism - 🏆 85. / 68 Read more »

Fighting back against disinformation to protect American democracyWith Israeli hostages and Palestinian civilians trapped inside Gaza, overseas family members of innocent people caught in the conflict feel powerless. In Brussels where the European Union is headquartered, our reporter Rosie Birchard met some of those hoping and praying that their loved ones will make it out alive.
Source: dothaneagle - 🏆 337. / 59 Read more »