What effect does $ 90 oil have on the capital market?
According to Tejarat News, the price of oil reached the highest level in the last seven years and the price of oil reached $ 90. Some experts Capital Market It is said that the global rise in oil prices may affect the stock market and the trading of some symbols.
Kavian Abdullahi, a financial markets expert, explains in an interview with Tejarat News: “Recently, we have witnessed an increase in oil prices in world markets, the price of oil had reached about $ 90.”
“Most of the government budget comes from oil sales,” he said. Rising oil prices could cover some of the budget deficit. As the spread of bonds in the capital market decreases, the price of oil alone affects the stock market.
The financial markets expert continues: The price of oil directly affects the commodity traded on the stock exchange.
Capital market growth with rising oil prices
He explains with an example: “Increasing oil prices can have a great impact on the refining industry because in this industry, oil is delivered to the refinery at a discount, which increases if oil becomes more expensive, which can increase the group’s profits and ultimately grow the industry.”
“The products produced in these refineries have a direct impact on oil, which is the raw material for the production of these products,” Abdullahi said.
He continues: The prices of some petrochemical products, especially products that use fuel, are highly correlated with oil prices. With the increase in oil prices, the prices of these petrochemical products will also increase.
“These price increases lead to higher profitability, sales and stock returns,” says the financial markets expert. Due to the great impact of these industries on the index, we must see market growth in the long run.
Abdullahi concludes: “In general, the stock market is greatly affected by the price of oil, and in principle, this effect is direct for most industries and they will move in the right direction.”
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