The turmoil in the Middle East is increasing demand for oil and as a result the prices of crude oil are rising. There are many areas of concern with regards to the whole Middle East story.
The Middle East and nations in the region are currently upset at the International Monetary Fund (IMF) and the World Bank for supporting the people of Iran. Iran has a strong religious background and has long been hated by the entire Middle East. A week ago, North Korea threatened war if they were not allowed to have nuclear weapons and Iran, which is a member of OPEC and has huge reserves of crude oil, threatened war if they were not given the bomb.
What all this means is that many nations in the Middle East are suddenly realizing that crude oil prices are going up dramatically. They are joining forces in an effort to gain access to the best oil to provide for their people. But while the Middle East is an oil producing region, crude oil prices still need to rise in order to compensate for increased production in other regions of the world.
In addition, the prices need to rise in order to balance out the growing demand in some areas. Most countries in the Middle East depend on imported oil. Since this creates a demand for more oil, the price needs to rise.
This is the time for traders to put up oil prices. It will not only help to increase liquidity in the market but it will also provide the opportunity to invest in the largest company in the world. It is so important to look at the opportunity to buy at the current lows and the high point in time in order to benefit from the current downtrend.
While we have seen a good down trend in oil prices recently, it is not unusual to see a reversal in price, especially in the beginning stages of the market. There are many reasons to look at the reversal in prices. It could be the same group of nations that originally made the claim to have an atomic bomb is now trying to prove it with a nuclear device.
Some believe that the expectation of oil prices to increase as the world economy picks up will encourage the nations that want to become involved in oil markets to hold off on the purchase at this time. Countries that have higher average prices may also consider holding off on buying, which would be a huge benefit to those who buy oil at the current low prices. When oil prices increase, the opportunity to make a profit increases as well.
If the U.S. decides to support OPEC with the use of exports of crude oil, the nation may decide to act unilaterally and support the crude oil prices during this down trend. Unfortunately, there may be no long-term economic benefit for the United States. We are already on a debt binge, so if we support OPEC at this time it could cause future instability.
While we are likely to see a continuation of the downward trend in the crude oil prices, there is still an opportunity to buy at the current low point in time. One day, the prices may spike up again and at that time, if you had purchased when they were low, you would get a very large discount. At the same time, you are not purchasing at an advantage because you are buying at the beginning of the downward trend.
Some investors will buy crude oil in hopes of getting a dividend that comes with that purchase. The more of an advantage you have when you sell oil in the short term, the greater your chance of getting that dividend payment. This is true for all kinds of investing.
Those who are new to the market and do not know the variations in prices may not understand how the cost of crude oil impacts the price you pay for that product. That is why I stress to get involved now while the prices are low. because the trend may reverse before you know it.