Generally, most industrial-motor-related things need oil as a means to generate power. Thus, oil has been one of the most important commodities to most countries.
Any adverse impact on oil price could bring chaos to the world as fear of inflation would surface. In such an event, the world economies could be drawn to a standstill.
For example, the oil shock in 1973/74 and 1980/81 caused the world stock markets to tumble. Again in 1990, the Gulf Crisis also contributed to the collapse of the stock markets.
Such external shocks could happen again. Therefore, it would be helpful if an investor spent some time monitoring the oil price charts as well as any world events that could lead to another oil crisis.
Event
1973/74 oil shock
1980/81 oil shock
1990 Gulf Crisis
--------> sudden rise in oil price -> increase price of Brent crude
--------> World stock markets tumble.
To observe:
- Brent crude chart
- World events regarding oil prices
Ref: Making Mistakes in the Stock Market by Wong Yee
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