Start the conversation
Leave a Reply
If there's any industry whose sentiment can go from hot to cold in just the span of a week, it's the oil industry.
That's how this past week has been, with both WTI and Brent – the U.S. and global benchmarks, respectively – down more than 7% since July 11, when prices logged their worst daily drop in over a year.
Naturally, this has analysts and talking heads across the industry in a fit of frenzy. After all, WTI had been on an unstoppable long-term rally, gaining over 23% since the start of the year.
Let them worry.
I'm not the least bit surprised about the recent pullback. With such an incredible run to three-and-a-half-year highs, prices were bound to get overheated and drop below the psychologically important $70 level at some point.
Geopolitics have been so front-and-center lately that despite boosting prices to record highs earlier this month, they've now turned on us and dragged prices back lower.
Here's how this switch happened – and why I'm confident oil markets will turn back in our favor…
The Real Reasons Oil Prices Are Falling Below $70
Since the start of summer, there's been only one catalyst propelling and dragging oil prices above $70 and back below this week…
Geopolitics, plain and simple.
Except when it comes to geopolitics, things are never simple.
Start the Countdown: In just FIVE days, you could have a fat check for $23,441 in your mailbox. And the best part is, it’s just one short phone call away. Over 80% of eligible seniors may be entitled to this cash. Are you one of them?
Oil's rally in June and earlier this month centered on Iran, which the White House has been attempting to blackball from the oil market by pressuring allies to block the country's imports. This initiative boosted prices to $74 a barrel by the end of June, capping off oil's fourth straight quarterly gain.
Not only that, but Iran – which is OPEC's third-biggest oil producer – has also threatened to halt exports from the Strait of Hormuz, the world's largest concentration of tankers carrying about 30% of all seaborne-traded crude oil.
But Iran hasn't been the only player at the card table.
Join the conversation. Click here to jump to comments…
About the Author
Dr. Kent Moors is an internationally recognized expert in oil and natural gas policy, risk assessment, and emerging market economic development. He serves as an advisor to many U.S. governors and foreign governments. Kent details his latest global travels in his free Oil & Energy Investor e-letter. He makes specific investment recommendations in his newsletter, the Energy Advantage. For more active investors, he issues shorter-term trades in his Energy Inner Circle.
Tags: Oil Prices