We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
The global oil market witnessed a substantial rally recently, with prices reaching their highest levels since mid-April. This surge was aided by a combination of geopolitical tensions and extended output cuts by major oil-producing nations. Below we highlight the triggering factors in detail.
Attack on Russian Oil Export Hub: Ukraine's naval drone attack on Russia's port of Novorossiysk, a crucial hub for Russian oil exports on the Black Sea, heightened geopolitical tensions. This incident led to concerns about potential disruptions in oil supply from Russia, the world's second-largest oil exporter, per a CNBC article.
Saudi Arabia's Extended Production Cut: OPEC ace Saudi Arabia, the world's top oil exporter, extended its voluntary crude oil output cut of one million barrels per day until the end of September. The initial cut was implemented in July through August and was later extended with the possibility of further extensions and deepening.
Market Reactions and Analyst Insights
The impact of these geopolitical events on the oil market was immediate, leading to a surge in oil prices. Josh Young, Chief Investment Officer at Bison Interests, a prominent oil and gas investment firm, predicts even higher prices due to reduced oil supplies. Young believes that over the next five years, oil prices will remain volatile and continue to rise, as quoted on the CNBC article.
On the other hand, Citi's Ed Morse, the global head of commodity research at the bank, is relatively more optimistic about crude oil supplies after September. He anticipates that Saudi Arabia and Russia's output will likely increase in October, leading to a potential price ceiling of $90 per barrel this quarter. Morse also cites limited demand growth, particularly in China, as a contributing factor to price stability beyond the current quarter.
Country ETFs to Gain/Lose
Against this backdrop, below-mentioned country ETFs may gain/lose.
Norway is among the top 10 nations famous for oil exports and with its comparatively low population, oil forms the key part of the country’s GDP. Per U.S. Energy Information Administration (EIA), Norway is the largest oil producer and exporter in Western Europe. The oil and gas sector makes up around 22% of Norwegian GDP and 67% of Norwegian exports.
Canada is also among the world’s top 10 oil producers. The oil, gas and mining sector makes up about over a quarter of Canada’s economy. The country is one of the world's largest producers of dry natural gas.
Normally, Turkey’s 90% of the crude requirements are satisfied by imports. Hence, this country’s economy is also under tight spot. In any case, the country’s economy has been suffering from high inflation.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Country ETFs to Gain/Lose as Oil Prices Rally
The global oil market witnessed a substantial rally recently, with prices reaching their highest levels since mid-April. This surge was aided by a combination of geopolitical tensions and extended output cuts by major oil-producing nations. Below we highlight the triggering factors in detail.
Attack on Russian Oil Export Hub: Ukraine's naval drone attack on Russia's port of Novorossiysk, a crucial hub for Russian oil exports on the Black Sea, heightened geopolitical tensions. This incident led to concerns about potential disruptions in oil supply from Russia, the world's second-largest oil exporter, per a CNBC article.
Saudi Arabia's Extended Production Cut: OPEC ace Saudi Arabia, the world's top oil exporter, extended its voluntary crude oil output cut of one million barrels per day until the end of September. The initial cut was implemented in July through August and was later extended with the possibility of further extensions and deepening.
Market Reactions and Analyst Insights
The impact of these geopolitical events on the oil market was immediate, leading to a surge in oil prices. Josh Young, Chief Investment Officer at Bison Interests, a prominent oil and gas investment firm, predicts even higher prices due to reduced oil supplies. Young believes that over the next five years, oil prices will remain volatile and continue to rise, as quoted on the CNBC article.
On the other hand, Citi's Ed Morse, the global head of commodity research at the bank, is relatively more optimistic about crude oil supplies after September. He anticipates that Saudi Arabia and Russia's output will likely increase in October, leading to a potential price ceiling of $90 per barrel this quarter. Morse also cites limited demand growth, particularly in China, as a contributing factor to price stability beyond the current quarter.
Country ETFs to Gain/Lose
Against this backdrop, below-mentioned country ETFs may gain/lose.
ETFs to Gain
Norway – Global X MSCI Norway ETF (NORW - Free Report)
Norway is among the top 10 nations famous for oil exports and with its comparatively low population, oil forms the key part of the country’s GDP. Per U.S. Energy Information Administration (EIA), Norway is the largest oil producer and exporter in Western Europe. The oil and gas sector makes up around 22% of Norwegian GDP and 67% of Norwegian exports.
Canada – iShares MSCI Canada ETF (EWC - Free Report)
Canada is also among the world’s top 10 oil producers. The oil, gas and mining sector makes up about over a quarter of Canada’s economy. The country is one of the world's largest producers of dry natural gas.
ETFs to Lose
India – iShares India 50 ETF (INDY - Free Report)
India is almost entirely dependent on imports to back its oil needs. An oil price rally could thus be a major deterrent to India investing.
Turkey – iShares MSCI Turkey ETF (TUR - Free Report)
Normally, Turkey’s 90% of the crude requirements are satisfied by imports. Hence, this country’s economy is also under tight spot. In any case, the country’s economy has been suffering from high inflation.