Russia-Georgia Conflict Affects Crude Oil Prices

Russia's making headlines again, this time around for its intense military operation in Georgia. While the world's attention turned to Beijing's Olympic Games, Russian troops advanced into Georgian territory to reclaim the separatist region in South Ossetia. Just today, Russia's president ordered a halt to the invasion, but forces are still authorized to fire on enemies.

I wanted to draw your attention to this conflict because the hostilities could damage a key oil pipeline in the region, dramatically impacting crude oil supplies. Already, crude oil prices are inching their way up and energy stocks moved slightly higher in Tuesday morning trading.

Russian jets devastated Georgia's Black Sea port of Poti, a major crude oil hub, but the oil and gas pipelines that run through Georgia have not been damaged. As a precaution, however, British Petroleum (BP) shut down the pipelines until regional tensions subside.

The recent fighting has taken its toll on Georgia's economy, which enjoyed windfall payouts from oil exports. Some energy and hydro-power projects will be put on hold until a stable transit route for oil and gas through Georgia to the Mediterranean is restored.

By midday, shares of BP, Hess Corporation (HES) and ConocoPhillips (COP) were up 1.3%, 1.65% and 0.5%, respectively. All three of these companies–led by BP–have an ownership stake in the pipelines.

Apparently, investors are taking the news of the military action in stride, as oil prices fluctuated only narrowly throughout the day.

This conflict further confirms what I've been telling you all along: The recent pull back in crude oil prices is only temporary. There are simply too many factors indicating that it's only a matter of time before prices rise again, which is why I've told subscribers across all four of my services to buy oil and gas stocks. You too should take this opportunity to pick up some extra shares of your favorite energy plays.

In the meantime, as you can see, the world is constantly changing and it's important for you to stay on top of the trends. Not sure where to begin? Take the first step by signing up for my FREE e-letter, What's Working on Wall Street Now, and find out the latest market insights and stock tips delivered right to your inbox every Thursday.

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