US Land and Sea Threats Stir Tension!
Geopolitical tensions can always significantly impact the oil market, and one recent example is the threat of a US ground offensive against drug operations in Latin America. This tension began with the developing situation between the United States (US) and Latin American countries, particularly Venezuela and Mexico, which frequently serve as drug trafficking routes supplying the global market.
The US has a very assertive foreign policy regarding drug trafficking, particularly involving major oil-producing countries like Venezuela. This threat of a ground offensive adds to tensions because these countries, especially Venezuela, have large oil reserves and significantly influence the global energy supply.
If the US were to launch an offensive against drug operations in the region, it could directly impact political stability and security in oil-producing countries. The uncertainty created by conflict or potential disruptions to oil infrastructure would increase global market anxiety about oil supplies. This could lead to higher oil prices as the market begins to assess the risk of energy supply disruptions originating in the region.
Correlation with Oil Prices:
Rising Geopolitical Tensions: Geopolitical tensions, such as the threat of an attack on Venezuela or other oil-producing countries, can cause the oil market to respond with higher prices as investors worry about supply disruptions.
Decreasing Oil Supply: If there is a threat of an attack or disruption, oil production in the region could be hampered, or at least create uncertainty about the sustainability of supply. This drives up oil prices because a tighter supply will boost demand for existing stocks.
Relationship with Gold: Geopolitical tensions that lead to economic uncertainty can also support gold and silver prices. In this situation, many investors turn to safe-haven assets like gold as protection against global uncertainty.
Simply put, geopolitical tensions involving the threat of a US ground attack in Latin America increase uncertainty about the stability of oil supplies. This directly affects oil prices as the market perceives potential disruptions to production. When oil prices rise, inflation and energy costs can also increase, potentially worsening global economic conditions and increasing demand for gold and other safe-haven assets. (asd)
Source: Newsmaker.id
