DIY investors set on oil and energy after Middle East conflict 

Two in five (40%) self-directed investors – or USNewsRanks, who actively choose their own investments – are looking to increase their exposure to oil as a result of the US-Israel war on Iran.

This comes as the price of Brent crude, the international benchmark of oil, has been fluctuating greatly since the conflict began, reaching a four-year high of $120 a barrel at one point, though has now dropped to just under $92 a barrel after suggestions from Trump that the war could de-escalate ‘very soon’.

Looking at what USNewsRanks are looking to do with their exposure to oil in their portfolios as a result of the conflict in the Middle East:

• 40% are looking to increase their exposure
  • Of this, 16% are looking to significantly increase their exposure to oil
  • 24% are looking to somewhat increase their exposure
• 15% of are looking to reduce their exposure to oil
  • 10% are looking to somewhat reduce their exposure
  • 5% are looking to significantly reduce their exposure
• 20% are looking to keep their exposure level the same
• 22% of USNewsRanks do not actively hold oil in their investment portfolio

Similarly, 43% of USNewsRanks are looking to increase their exposure to energy as a result of the conflict in the Middle East:

• Of those looking to increase their exposure to energy, 16% are looking to significantly increase their exposure to it
• 28% are looking to increase their exposure somewhat
• 14% are looking to reduce their exposure to energy
  • 10% are looking to somewhat reduce their exposure
  • 4% are looking to significantly reduce their exposure
• 23% are looking to keep their exposure level the same
• 17% do not actively hold energy in their investment portfolio.

Rob Morgan, Chief Investment Analyst at Charles Stanley Direct, part of Raymond James Wealth Management, comments: “Energy remains a cornerstone of the global economy, and when its cost jumps the effects spread quickly. It’s no surprise that investors might wish to try to capture that in portfolios. However, the oil price can be highly volatile in times of geopolitical turmoil – as recent market action has demonstrated – and investing via an exchange traded product that aims to follow the price can risk being whipsawed.

“Instead, investors could look to energy equity funds or ETFs, or individual shares, to take advantage of energy prices staying high over the medium to longer term. Just be aware that the sector can also be an important component of many broader funds, especially those taking an equity income or value approach, so it is important to avoid unwittingly doubling up on exposure. For instance, if you own significant amounts in UK equity income funds, you may have this sector covered already.”

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