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Country ETFs to Top/Flop on Surging Oil on Middle East Tension
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Oil prices jumped more than 4% on Monday morning as news of a surprise attack on Israel by the Palestinian Islamist group Hamas sent shockwaves through global markets. The incident has triggered concerns of a broader conflict flaring up in the already volatile Middle East region, sending oil prices northbound (read: 5 ETFs to Gain on Israel Attack).
Over the weekend, Hamas launched the most significant military assault on Israel in decades, catching many by surprise. The Middle East is a key player in the global oil exploration market, making up more than 30% of the world's oil production. Any instability in the region has the potential to disrupt oil supplies and send ripples through the global economy.
Concerns of Conflict Escalation and Iran's Role
Despite no immediate oil supply disruptions, market watchers like Andy Lipow, the president of Lipow Oil Associates, warn that the initial oil market reaction is driven by fears of the conflict spreading to other regions like Iran, per a Yahoo Finance article. Iran – is both a key oil producer and a supporter of Hamas.
The concern is that the situation could finally draw Iran into the conflict, directly impacting the transit of oil through the vital Strait of Hormuz. With 40% of world exports going through the Strait of Hormuz, Rapidan Energy Group’s president, Bob McNally projects a conflict between Israel and Iran and the likely closure of this crucial waterwayto easily lead to a $5 to $10 bump in oil prices.
Though chances are high that the oil market rally is short-term nature, if Western countries now officially link Iranian intelligence to the Hamas attack, then Iran’s oil exports are likely to face downside risks.This would cause a surge in gasoline prices in America.
Against this backdrop, we highlight below a few country ETFs that can gain/lose if oil continues to hit highs in the short term.
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.
Image: Bigstock
Country ETFs to Top/Flop on Surging Oil on Middle East Tension
Oil prices jumped more than 4% on Monday morning as news of a surprise attack on Israel by the Palestinian Islamist group Hamas sent shockwaves through global markets. The incident has triggered concerns of a broader conflict flaring up in the already volatile Middle East region, sending oil prices northbound (read: 5 ETFs to Gain on Israel Attack).
Over the weekend, Hamas launched the most significant military assault on Israel in decades, catching many by surprise. The Middle East is a key player in the global oil exploration market, making up more than 30% of the world's oil production. Any instability in the region has the potential to disrupt oil supplies and send ripples through the global economy.
Concerns of Conflict Escalation and Iran's Role
Despite no immediate oil supply disruptions, market watchers like Andy Lipow, the president of Lipow Oil Associates, warn that the initial oil market reaction is driven by fears of the conflict spreading to other regions like Iran, per a Yahoo Finance article. Iran – is both a key oil producer and a supporter of Hamas.
The concern is that the situation could finally draw Iran into the conflict, directly impacting the transit of oil through the vital Strait of Hormuz. With 40% of world exports going through the Strait of Hormuz, Rapidan Energy Group’s president, Bob McNally projects a conflict between Israel and Iran and the likely closure of this crucial waterwayto easily lead to a $5 to $10 bump in oil prices.
Though chances are high that the oil market rally is short-term nature, if Western countries now officially link Iranian intelligence to the Hamas attack, then Iran’s oil exports are likely to face downside risks.This would cause a surge in gasoline prices in America.
Against this backdrop, we highlight below a few country ETFs that can gain/lose if oil continues to hit highs in the short term.
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.