The supply of oil has a major impact on its price, which is why investors need to pay close attention to the situation between China and Vietnam.
According to The Associated Press, Vietnam recently demanded that China stop drilling operations in a disputed area of the South China Sea. The Asian nation has since refused, but that doesn’t mean the situation is over. For this reason, investors who participate in crude oil trading should keep an eye on the news to stay informed on new developments.
Vietnam isn’t the only nation angered by China’s assertive claims of this territory, as the Philippines and other countries are also upset. The disputed area is said to have large oil and gas deposits.
Experts believe this move by China is provocative, which could cause tension and potentially damage the oil supply.
“This act by China is much more dangerous than previous actions such as cutting the exploration of cable or fishing bans,” Tran Con Truc, the former head of a government committee overseeing the country’s border issues, told The AP.
Vietnam’s foreign ministry has also made it clear that country is not happy with China.
“All foreign activities in Vietnam’s seas without Vietnam’s permission are illegal and invalid,” the ministry said in a statement. “Vietnam resolutely protests them.”
Another factor that could come into play is the recent defense pact the U.S. signed with the Philippines to help fight against China’s growing economic and military might, according to Bloomberg.
Investors need to keep a close eye on this situation, as any future tensions could move the price if oil supplies are cut off in the area.
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