During last few days we were witnessing the rise of crude oil prices. This is the consequence of tensions in Saudi Arabia and between Saudi Arabia and Iran. On Monday, Saudi police arrested 11 princes and 38 former ministers accused of corruption. Moreover, on Saturday, from Yemen territory controlled by Iran-backed rebels, a missile was fired toward Riyadh, which was intercepted and destroyed by Saudi forces. „Saudi Arabia considers an unsuccessful ballistic missile attack on Riyadh International Airport as an act of war by Iran.” Saudi Foreign Minister Adil al-Jubeir told CNN. The Minister, referring to Article 51. Of The UN Charter, which allows states to self-defend when they experience armed assault, reserves the right to take „appropriate” steps against Iran.
As you can see in the chart above, oil prices over the past month have grown quite fast, and given that the Riyadh-Tehran conflict will be getting bigger, we can expect a further rise in oil prices. In addition, even If we assume the peaceful settlement of the dispute, issue of Yemen remains. Solving the conflicts of Arab Peninsula can take a long time, so the price of oil will probably continue to grow (remember Saudi Arabia is one of the most key members of OPEC). What does this mean for investors? An opportunity to invest in ETFs tracking companies involved in the production of crude oil and its derivatives.
The United States Oil Fund LP has grown over 9% over the past month, but its share price is still lower than it was at the beginning of the year. The same is true for other ETFs following the oil market but it is expected that they will reach a higher price by the end of the year than they did in January 2017. It is worth considering investing in one of the ETFs from table below before their prices start to grow rapidly.