As the most recent escalation of hostilities between the US and Iran simmers down for the time being, we decided to take a look at how the oil price usually behaves when there’s a prolonged conflict, especially in the Middle East.
In this video you’ll see an oil price analysis that doesn’t focus so much on the specific levels on the oil chart, but rather the relationship between oil price and war and its movements in both direction before, during and after conflicts.
So how does war affect oil prices? As far back as the Civil War we can see an impact with oil price spiking, but other conflicts like WWII didn’t have a lasting effect on the oil price chart. What
So in conclusion we do think that conflicts have a short term effect on oil prices but there’s no guarantee that it’s always upwards. Several occasions have seen production in other areas ramp up to cushion the blow of any disruption in oil production in affected countries and areas.
But there are two conlusions from this oil price technical analysis that are relatively clear:
1. Should oil prices spike, then it is very likely that they will drop down sharply once the conflict is resolved. This is a hypothtetical scenario in which bearish trades can be profitable
2. The global economy has a larger impact on oil prices in general. Supply and demand from countries and industries outweighs the temporary fluctuations caused by conflict.
Do you think there will be a more serious conflict to impact the oil price in 2020? Let us know in the comments! And let us know what you think about our Oil Price and War Historical Analysis Since 1861 video!
Give us a thumbs up if you our oil price and war technical analysis and make sure to subscribe to the capital.com channel for more oil price chart analysis and oil price news!
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