Dow Jones and Oil Up as Russia Moves to Annex Crimea

Russia moving to annex Crimea hasn't rattled stock markets, but commodities are taking more notice.

Mar 18, 2014 at 3:30PM

Russia is moving forward with annexing Crimea, and the Dow Jones Industrial Average (DJINDICES:^DJI)and oil are both moving higher in trading today. Investors are bidding up stocks because it appears that Crimea joining Russia won't result in military action from the European Union or the U.S., something that was uncertain just last week. But oil is up because the Crimea move has more to do with energy than anything else.

Energy is big business in Crimea
Crimea has already claimed ownership of Ukraine's Black Sea oil and gas, where 1.5 billion cubic meters of gas were extracted last year. That's one of the reasons Russia was interested in the region. Before unrest broke out this year, Ukraine (which Crimea exited in a disputed Sunday referendum) was close to reaching a deal with a consortium led by ExxonMobil (NYSE:XOM) that could have increased production to 5 billion cubic meters per year.  

Xom Station Image

A Mobil station that could see prices rise if military conflict erupts over Crimean energy. Image owned by The Motley Fool.

Russia annexing Crime might not be good for that potential deal. However, a calming of tensions would be good for ExxonMobil's joint venture with Rosneft in the Russian Arctic, its biggest investment outside the U.S. The company could have seen its multibillion-dollar investment put in jeopardy if violence between Russia and the West erupted.  

However, Crimea is still in turmoil and Ukraine recently authorized its military to use force there. While the stock market may be overlooking risk of violence in the region, the commodity market isn't, and that's one big reason oil is up 1.5% to more than $99.50 today.

Chevron continues litigation
Elsewhere in Big Oil, ExxonMobil competitor Chevron (NYSE:CVX) received the go-ahead by a Gibraltar judge to pursue a lawsuit against online poker magnate Russell DeLeon, who helped fund a lawsuit against the company in Ecuador. U.S. courts recently found the Ecuadorian lawsuit and judgment of $9.5 billion to be full of holes including fraud and extortion.

More than likely, the case goes back to court where it's been for more than a decade and investors are left hanging. For today, it's a small win for Chevron in a legal battle that continues on.

One great way to create value in energy
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Travis Hoium has no position in any stocks mentioned. The Motley Fool recommends Chevron. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

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The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

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David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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