Oil prices are inching up on heightened tensions in Iraq. While some traders may have been caught off guard, investors can utilize exchange traded funds to capture market areas that could benefit from higher oil prices.
The price of crude oil has been relatively stable in recent years, staying within range as political volatility in the Middle East remained subdued and shale oil production in the U.S. bolstered supplies.
However, the escalating violence in Iraq has pushed oil prices to their highest level in nine months, reports John Authers for Financial Times.
In early Wednesday, Islamic extremists was said to have taken Iraq’s largest oil refinery, reports Rod Nordland for the New York Times.
West Texas Intermediate crude oil futures are now hovering around $106.2 per barrel.
Consequently, with the risk of greater supply disruptions in Iraq, investors can take a look at their equity positions to hedge against risks in the oil market.
For example, Russian stocks, namely government-backed oil giant Gazprom or Lukoil, can benefit from the uncertainty. According to Absolute Strategy Research, markets that have shown a positive correlation of 50% or more to oil prices include Russian stocks, along with Norwegian and Polish equities.