Unrest In The Middle East: Are Oil Stocks Now A Dangerous Investment?

Protests are raging in the Middle East and North Africa. Some governments have the military attacking the protesters and thus the unrest in the region may now more realistically be called a revolution or a civil war. Dictators are being forced out and change is happening rapidly in the Middle East.

Impossible to Predict Stock Market

How does this impact the value of oil stocks? Answering that question is very difficult. Even key analysts in oil industry, government and the Middle East cannot predict the future. No one really knows what kind of turmoil will result in the stock market as the unrest in the Middle East continues.

As always, America remains far too dependent on foreign oil. SUVs clog our streets and too many people drive everywhere, even for errands in the local area where they could walk to do the task. Alternatives to using foreign oil, such as electric cars and alternative fuels, are catching on, but change is occurring slowly.

Thus many people still feel that oil stocks are a good investment. Companies like Exxon Mobil, Marathon Oil and ConocoPhilips are stocks owned by many Americans. A stock analyst, James B. Stewart, told the Wall Street Journal , “I long have urged investors to have a position in oil and other natural resources as an inflation hedge.”

However, the stock market is very skittish and can tank over many different kinds of unexpected events in the world. An uprising encompassing countries that produce oil is the type of situation that can bring ongoing drops in the stock market.

Libya Saudi Arabia : Key Oil Suppliers

Libya is an oil supplier to the world. Now it looks like a civil war may be brewing there unless the protesters are able to quickly get Gaddafi to leave the country. Also, there is unrest in Saudi Arabia. The country has most of the available oil in the world.

Despite turmoil, many investors in oil have a buy and hold strategy. There are probably many Americans who have been making a lot of money via investing in oil companies. They must smile when they see a huge, gas guzzling SUV drive by. Are they skittish now or just sure that Americans will always need foreign oil?

Oil Prices are Increasing

Oil costs are more than $100 a barrel currently. It is impossible to predict how high oil prices will spike. Many people are still bullish on oil investments while others have panicked over the chaos in the Middle East and have sold off oil stocks already. Other people think it is reprehensible to invest in oil stocks due to the source of oil in countries run by dictators or a monarchy.

Who knows what history will someday say about how the current Middle East turmoil will impact oil stocks? There is never any guarantee in stock investing. It is always a risky venture that can lead to failure or profits.