In the past couple of weeks it appeared as though tensions in Ukraine were easing. However, recent military action has renewed fears in the area, which pushed up the price of oil.
Commodity options traders should be paying close attention to this situation, as Russia is believed to be behind much of the action in Ukraine. Small economic sanctions have already been placed against the Eastern European nation, but if things get worse, the country’s supply of oil could be impacted. As a result, prices could continue to increase, which may provide investors with an opportunity to make money.
“The increasing tensions between the West and Russia over Ukraine could provide further upside momentum to the oil market, supporting crude oil prices higher,” Myrto Sokou of Sucden Financial Research in London, told The Associated Press.
Renewed worries began when pro-Russian militants ceased government buildings in Ukraine. In response, Ukraine’s government sent tanks and troops to regain these buildings. NATO Secretary General Anders Fogh Rasmussen said the alliance would send troops to assist the effort, which could escalate the situation.
“Oil is being driven more by the Ukraine situation,” Guy Wolf, global head of market analytics at Marex Spectron Group in London, told Bloomberg. “Does this situation mean more intense disagreements elsewhere, as in the Cold War? In a tight market, such as WTI, anything can have an amplified effect.”
Any further escalation could lead to future increases to oil. Commodity options traders should watch closely for any signs that could heighten tensions. For example, if Russian President Vladimir Putin announces he is going to increase military presence in Ukraine, the U.S. could impose more economic sanctions that drive up oil prices.
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