Tweet recalling Yom Kippur war, 40 years on, jolts oil traders

Tweet recalling Yom Kippur war, 40 years on, jolts oil traders

Thu, Oct 10 2013

NEW YORK (Reuters) – Oil traders razor-focused on signs of escalating violence in the Middle East were jolted on Thursday by a Twitter posting from the Israeli military that, at first glance, suggested they had just bombed Syrian airports. Oil prices jumped $1 as the talk raced through oil markets, which frequently react quickly to rumors of geopolitical events and where traders have increasingly turned to the Internet and social media for advance warning of escalating risks, from the Arab Spring to the Iranian nuclear standoff.The Tweet was true, but it wasn’t news. The posting referred to an attack 40 years ago in the Yom Kippur war, the latest in a series of Tweets from the Israel Defense Forces Twitter handle (@IDFSpokesperson) commemorating the war.

The Tweet just before 10:30 a.m. EDT stated: “October 10 #YomKippur73: Israel Air Force bombards airports in Syria to prevent Soviet weapons reaching the Syrian Army”. It then links to a website that gives a day-by-day account of the war.

“Obviously this was part of our Yom Kippur Twitter series. The facts are there and simple to read. It was apparent within the Tweet itself,” said IDF spokesman Peter Lerner.

Although traders quickly realized the historical nature of the Tweet, oil prices maintained their gains, supported in large part by hopes of a breakthrough in U.S. debt discussions and earlier anxiety over political stability in Libya.

Front-month Brent crude prices rallied from $110.40 a barrel at 10:20 a.m. EDT — just before the Tweet — to as high as $111.50 just after 11 a.m., as trading volumes rose. By 1 p.m. oil was up $2.68 a barrel to $111.74, its highest in a month.

The incident is the latest example of how social media outlets are playing an increasingly important role in financial markets, often causing sudden moves – not always corrected.

In April, hackers took control of the Associated Press Twitter account and falsely posted that two explosions at the White House injured President Barack Obama. Reuters data showed the Tweet briefly wiped out $136.5 billion (89.5 billion pounds) of the S&P 500 index’s value before markets recovered.

“The IDF tweet caused a bit of a stir in the oil market, with rumors circulating of a possible Israeli strike in Syria before people realized they were referring to events 40 years ago,” said Richard Mallinson, chief policy analyst at consultancy Energy Aspects.

Oil prices surged in October 1973 after a coalition of Arab states launched a surprise attack on Israel during the Jewish holy day of Yom Kippur, threatening to overwhelm the country. Israel launched a massive counter-offensive before a ceasefire took hold.

The war prompted Arab nations and members of OPEC to use what they called “the oil weapon,” proclaiming an oil embargo that lasted several months and set off global oil price shocks.

More recently, the conflict in Syria, and its potential to spill over into large oil-producing nations in the region, have kept crude traders on closely watching for fresh news.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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