As the drums of war were beating across western capitals following the alleged chemical attack on civilians by the Government of Bashar Assad in Syria, the ripple effect swept across the energy industry pushing crude futures up in way that was unimaginable a few months ago. Energy industry experts were citing the possibility of triple-digit oil prices this year, if the escalating tensions led to a military response to the chemical attack incident. So, what does this mean for energy investment opportunities and the future of the industry?
Movement in Crude Futures
The week ending Friday 13 April saw both benchmarks posting their biggest weekly gain in just under a year of up to $5. Such a marked rise in crude futures hasn’t been witnessed since 2004.
- Brent crude was up 0.3 percent closing the week at $72.26
- WTI was up 0.4 percent closing the week at $67.35
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Although the IEA (International Energy Agency) largely ignored the price movements in its forecast of global oil demand and supply, citing uncertainty as to whether or not the upward movement is sustainable, other experts believe otherwise.
Why the Rise may be Sustainable
Following incendiary statements from Washington and Moscow, America and her allies lived up to the warning delivered by President Trump when up to 100 guided missiles were launched at Syria. The missiles targeted purported chemical research and production sites, with Russia promising to return the favor. So far the allies have made no indication of intending to sustain the attack but there are a number of factors that make the rise in crude futures sustainable.
- The geopolitical tension and conflict shows no signs of abating. If history is anything to go by, chances are we will witness more antics from the Syrian regime. The precedent that has been set by this and the previous response to chemical attacks almost guarantees a response from the allies.
- Another factor that almost guarantees a prolonged state of geopolitical tension is President Trump’s approach to foreign affairs. Unlike previous presidents who would telegraph their punches and pursue a clear-cut policy in times of tension and conflict, No. 45 loves to keep the world and his enemies guessing. Such an approach and brinkmanship is guaranteed to keep the geopolitical risk premium alive and well.
Make the Move, Today!
It remains to be seen whether the trend will hold up and redeem market participants who were ridiculed six months ago for predicting a rise of up to $70 per barrel. The myth of a love affair between America and the Russian bear is broken, and the NATO-US Alliance is not dead under President Trump after all. These are defining times for qualified investors looking for lucrative energy investment projects. FIG Tree Capital Ventures offers some of the best energy investment opportunities in Texas, North Dakota, and other places in the US. To learn more, call us at 866 (300) 2170 or 866 (894) 7309. You can also write to us at email@example.com or send a message.