Will Volatility Continue in Crude Oil?

04/06/2015 12:01 am EST


Jim Jubak

Founder and Editor, JubakPicks.com

MoneyShow's Jim Jubak discusses how the increased tensions in the Middle East and the possible nuclear deal with Iran have caused crude oil prices to gyrate up and down.

We're seeing a kind of push me, pull me in the Middle East that's driving oil prices up, driving oil prices down.

On the one side you've got the possibility that there will be some kind of nuclear deal with Iran and that will end sanctions against that country and Iranian oil flooding back into the market.

That's a lot of oil; the country is a big potential oil producer. Sanctions have really cut the amount of oil they can sell into the market so this would, new supply drive down the price of oil. On the other hand, we're seeing the war really which now includes Egypt, and Saudi Arabia, and Yemen, and basically, we're seeing here, the Sunni Arab states all banning together to try to really control the Shiite rebels, which have strong ties to Iran, so it's a sort of geopolitical proxy fight in this country, which happens to sit at the end of the Redman Peninsula, so fairly closely to oil routes.

Any fighting there tends to make people nervous and therefore when fighting spikes up in Yemen despite the fact that Yemen really doesn't have anything like oil that makes; anything like enough oil to make any difference in the market the fear is that fighting in Yemen will spike up and will influence fighting around it where you have actually countries that do produce a lot of oil and these big oil routes.

That's what you're getting right now. I don't know how this resolves itself. It resolves itself I guess by actually getting some news on whether there is a nuclear deal between the United States and other of its partners and Iran, whether the fighting in Yemen does indeed move up in intensity.

What we're getting right here is a kind of fairly volatile situation with pretty decent moves day to day but with no direction because these two things really do balance themselves out pretty well.

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