The tensions in the Middle East have driven back up the price of the United States Oil ETF, LP (NYSEARCA:USO) or oil. But will these tensions actually keep driving up the price of USO? Let’s review the latest developments related to the oil market.
The recent recovery in oil prices has also pressured up the price of USO. Nonetheless, since the beginning of March, the price of USO grew by only 1.8% while the price of oil rose by 4.8%. This discrepancy is mostly attributed to the contango in the futures market that led to roll decay. For now, the contango has only picked up in the past several weeks.
The nuclear deal struck between the U.S. and Iran hasn’t made Israel’s Prime Minister Netanyahu too happy and could stir up the stability of the region albeit the actual ramifications on the oil market seem, for now, modest. Iran’s importance in the global oil market isn’t as high as one would think: Iran’s oil consumption was around 1.75 million barrels per day, so only a third of its output is exported.
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