Matt Badiali is an expert when it comes to investing in metals, energy, and natural resources. His in-depth research into the oil and gas industry has led him to conclude that a barrel of oil may exceed $100 in the not so distant future. He says that the geopolitical environment is something that has a huge impact on oil prices. If a country is facing political tensions, for example, they will have big difficulties exporting their oil to other nations. When this happens the amount of available oil drops and prices go shooting up.
He points out that globally we have had a stable supply of oil for the past four years and as a result oil is relatively inexpensive. Matt Badiali says that this situation could change due to a number of reasons. Investors who start investing in oil right now could see some big gains if what analysts are saying about geopolitical factors turns out to be right.
Since 1944 the American dollar has dominated energy markets. Just about every single nation that exports oil does so in this currency including Iraq and Saudi Arabia. The reason for this is that the American dollar is the most stable currency in the world. Oil future exchanges also sell their contracts only in American dollars. This helps traders because they don’t have to deal with foreign exchanges when buying and selling futures contracts.
While most nations are fine with the current arrangement Matt Badiali says that a huge one, China, is not. That nation is trying to create a competing system and so they opened an oil futures exchange that uses their currency, the yuan. They located this exchange in the Shanghai Free Trade Zone so that any trader in the world can take part. This development means that investors looking to put money in oil futures need to keep their eye on China’s exchange, Matt Badiali says.
He also sees trouble brewing in Yemen due to concerns about a war breaking out. The Iran deal is off the table and so that could create instability in oil markets. He also points to Venezuela which is a nation in crisis and one of the world’s biggest suppliers of oil as another concern.