With tensions mounting in Iraq, we are seeing the price of oil start to climb. On Thursday West Texas Crude closed at nearly $107/bbl. and Brent Crude closed at $113/bbl.
When the price of oil rises it hits virtually the entire economy, as oil goes into virtually every product and service in some way. Either they are made from petroleum byproducts (plastics) or they were shipped in a vehicle that burns oil. However, there are a few sectors of the economy that are hit harder than most when the price of oil rises, and these are sectors that you should avoid if you think the price of oil will rise.
Airline stocks fell hard on Thursday and this was due to concerns that rising oil prices would eat into these companies’ profit margins. Fuel is one of the highest costs to the airline companies and rising oil prices will hurt them badly. Therefore investors who believe that the price of oil will rise should sell airline stocks if they own them.