In This Article:
Tensions in the Middle East have escalated ever since the globally-criticized attacks on Saudi Arabia’s crude facilities. The devastating drone attacks, on Aramco's largest oil processing plant site Abqaiq along with the Khurais oilfield, are expected to cut Saudi Arabia’s oil output by almost half (read: Profit From the Oil Rush With These ETFs).
Intensifying Middle East Tensions
Notably, Yemen’s Houthi rebels have taken responsibility for the attacks. However, per a Reuters article, Saudi Arabia has expressed concerns over utilization of Iranian weapons to carry out the attacks. It has requested U.N. experts to assess the incident. Moreover, secretary of state Michael Pompeo blamed Iran for this disruption, while the allegation was rejected by Tehran.
In fact, U.K.’s Prime Minister Boris Johnson has also blamed Iran for the attack. He is willing to participate in United States’ military efforts to enhance the security of the Gulf Kingdom (read: Leveraged Oil & Energy ETFs to Play on Saudi Attack).
However, Iran continues to deny its role in the drone attacks and has warned of a possible “all-out war” if any retaliatory action is taken against it.
Meanwhile, Trump administration recently announced plans to tighten security in Saudi Arabia and the United Arab Emirates by sending more officials and missile defense equipment. However, Iran’s president recently called out for Western powers to let the regional nations led by Tehran look after the security of the Persian Gulf.
Moreover, there are speculations that Saudi Arabia might need more time to return to its full capacity than the 10 weeks claimed by the Gulf nation. Per a Wall Street Journal report, repairs could require many months and may come at a massive cost of around hundreds of millions of dollars (read: Saudi Attack Threatens Oil Supply: Energy ETFs Set to Soar).
Tensions Brewing Over Iran’s Nuclear Program
Iran has raised its enrichment levels for uranium from the agreed 3.7% under the Joint Comprehensive Plan of Action (JCPOA) act to 5%, while keeping it below the 20% threshold. Tehran had also earlier announced that it will keep breaching agreements under the deal every 60 days, lest the European signatories to the JCPOA deal protect it from the sanctions imposed by President Trump.
ETFs in Focus
This has compelled many investors to take a closer look at the oil commodity space and related ETFs (see all Energy ETFs here).