$CL UP #long this is going to get out of control ♻️🏁🔥💯 Oil moving and the war advancing.
The relationship between war conflicts and the price of oil (specifically WTI crude, whose futures symbol is CL) is historically bullish, although its duration and strength depend on the scale of the conflict.
Here you have a summary of how war impacts the market and what factors determine the trend:
1. The Fear Factor: The "Risk Premium"
Before the first bomb falls or the first barrel is stopped, prices usually rise due to pure speculation.
Trend: Immediate bullish.
Reason: Investors buy oil contracts as a refuge or to protect themselves from a possible future shortage. This adds an extra $5 to $15 to the actual price of the barrel, known as the "geopolitical risk premium".
2. Real Disruption of Supply
If the war occurs in a producing country (such as Iraq, Libya, or Russia) or near key transport routes (such as the Strait of Hormuz or the Red Sea), the impact is physical.
Trend: Sustained bullish.
Reason: If infrastructure (refineries, pipelines) is destroyed or routes are blocked, there is less oil available in the global market. According to the law of supply and demand, with lower supply and constant demand, prices skyrocket.
The relationship between war conflicts and the price of oil (specifically WTI crude, whose futures symbol is CL) is historically bullish, although its duration and strength depend on the scale of the conflict.
Here you have a summary of how war impacts the market and what factors determine the trend:
1. The Fear Factor: The "Risk Premium"
Before the first bomb falls or the first barrel is stopped, prices usually rise due to pure speculation.
Trend: Immediate bullish.
Reason: Investors buy oil contracts as a refuge or to protect themselves from a possible future shortage. This adds an extra $5 to $15 to the actual price of the barrel, known as the "geopolitical risk premium".
2. Real Disruption of Supply
If the war occurs in a producing country (such as Iraq, Libya, or Russia) or near key transport routes (such as the Strait of Hormuz or the Red Sea), the impact is physical.
Trend: Sustained bullish.
Reason: If infrastructure (refineries, pipelines) is destroyed or routes are blocked, there is less oil available in the global market. According to the law of supply and demand, with lower supply and constant demand, prices skyrocket.