On local time June 12th, tensions in the Middle East suddenly escalated. Israel launched a military operation against Iran, an action that instantly "set the whole region on edge."
Israel has launched strikes on dozens of targets in Iran, including major nuclear enrichment facilities. Israeli Prime Minister Netanyahu confirmed that a military operation codenamed "Operation Rising Lion" was launched against Iran, aimed at paralyzing Tehran's nuclear program.
Source: Wall Street Journal
It's important to note that the Middle East is one of the world's most critical crude oil production regions, and the Strait of Hormuz is the "lifeline" for oil transportation. About one-third of the world's seaborne oil passes through here.
With the situation now on a hair trigger, the market has panicked. Investors are increasingly worried that oil transportation will be disrupted, and as a result, oil prices have been pushed onto a "fast track."
As of the time of post, the price of $WTI Crude Oil - main 2507(CLmain)$ has surged by more than 10%, reaching above $74 per barrel,while $Brent Last Day Financial - main 2508(BZmain)$ nearing $76 per barrel.
Meanwhile, the U.S.-Iran nuclear deal negotiations have caused widespread anxiety. After several rounds of talks, Iran had said that the agreement was "almost done," but then Trump came out and said he didn't think it would happen. Iran even threatened to attack U.S. military bases if the talks broke down. All these developments have made oil prices as volatile as a roller coaster, with investors' nerves being put to the test.
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1. Supply and Demand Tensions: OPEC+ "Internal Divisions," U.S. Market "Internal Struggles"
On the supply and demand front, OPEC+ oil-producing countries have recently been "at odds." Some countries are calling for increased production, but major producers like Saudi Arabia are still insisting on cutting output. This has led to a tightening of the crude oil market supply, and as a result, oil prices have risen.
However, the situation in the United States is a bit more complicated. Although it is now the peak season for crude oil consumption, consumption levels have not yet reached those of last year. Profits from gasoline, diesel, and other refined oil products are also declining, indicating an overall oversupply in the market.
2. Investors "Move Swiftly," Crude Oil ETFs Become a "Hot Commodity"
Despite the continuous turmoil in the crude oil market, investors seem to have sensed an opportunity.
In the A-share market, crude oil-related ETFs have performed strongly. $GUOTAI ZHONGZHENG OIL AND GAS INDUSTRY TRADING OPEN INDEX SECURITIES INVESTMENT FUND(561360)$ has led the gains with a 9.96% increase, $YINHUA CSI OIL & GAS RESOURCES EXCHANGE-TRADED OPEN-ENDED INDEX SECURITIES INVESTMENT FUND(563150)$ has risen by 9.44%, and $Spdr S&P Oil & Gas Exploration & Production Etf(XOP)$ has also seen a 5.85% increase.
Representative Hong Kong-listed oil and gas companies have also been on a continuous upward trend recently.: $CNOOC(00883)$ $PETROCHINA(00857)$ $SINOPEC CORP(00386)$
In the futures market, contracts such as WTICrudeOilMainContinuous2507(CLmain), MiniWTICrudeOilMainContinuous2507(MCLmain), BrentCrudeCashMainContinuous2508(BZmain), and MiniCrudeOilMainContinuous2507(QMmain) have all seen gains.
In the ETF space, the world's largest crude oil ETFs, including $United States Oil Fund LP(USO)$ and $Invesco DB Oil Fund(DBO)$ , as well as $United States Brent Oil Fund LP(BNO)$ , have all seen night session surges. In addition, leveraged ETFs such as $PROSHARES ULTRA ENERGY(DIG)$ and $ProShares Ultra Bloomberg Crude Oil(UCO)$ , $ProShares UltraPro 3x Crude Oil ETF(OILU)$ have also become popular among short-term speculators.
3. Outlook for the Future: Oil Price Trends Remain Unclear, Caution Advised
Although oil prices have risen now, in the long run, if OPEC+ really increases production, coupled with factors such as tariffs, oil prices may still be suppressed.
Therefore, the "big trend" of oil prices is still a bit unstable. Investors need to closely monitor the supply and demand relationship in the crude oil market, geopolitical factors, and policy changes from major oil-producing countries like OPEC. These factors will all have an important impact on crude oil prices and ETF performance.
Investors should also allocate their positions in crude oil ETFs reasonably according to their own risk tolerance and investment goals, and avoid over-concentration. After all, in this highly uncertain market, only caution can ensure long-term success.
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