Peace is good for Exxon, Chevron and BP
Amir is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
On November 14, 2012, a dangerous conflict began between Israel and Palestine. As the attacks between the two sides continued in Gaza, geopolitical risk began to rise substantially in the region. On November 20, 2012, Egypt aided in brokering a deal between Israel and Palestine and the rumor of a cease-fire began to spread. According to CNBC, oil prices reacted by decreasing by 2%. Brent Crude dropped by 1.7% by the market close on Tuesday and U.S. Crude Oil Futures dropped by 2.8% by market close. As of November 21, 2012, a cease-fire has been officially declared and for the moment, the tension has subsided.
Several major oil companies such as Exxon Mobil (NYSE: XOM), BP lc (NYSE: BP) and Chevron Corporation (NYSE: CVX) all experienced gains of more than 1% on November 19 when rumors began to spread of a cease-fire and these gains have continued through the week. Becuase the situation did not escalate, the price of oil has fallen and these companies will be able to sell more of it and lead to increased profits for the company.
Amir Townsend does not own any investments in oil.