Oil stocks Primed to Run on Iranian Oil Infrastructure Attack

Oil stocks didn’t get as big of a boost last week as some were expecting.  This, following increased tensions in the Middle East.

Not that I wish for war in the Middle East just so I can profit from rising oil prices.  But as an investor, you have to be in the loop on these types of things.

Some analysts believe that the reason oil prices haven’t soared recently is because of a muted global economic outlook.  That, and the overall expectation that OPEC will raise output at the end of the year.

It should also be noted that if Israel attacks Iran’s oil infrastructure — which some are predicting will happen now — Iran also isn’t a big enough player for such a thing to instigate a huge spike in oil prices.  Currently, Iran exports around 1.5 million barrels per day.  That’s not a lot in the grand scheme of things. 

Still, this would result in a slight market imbalance that could open up an opportunity to make some quick cash.  So the question is, how likely is it that Israel will take out Iran’s oil infrastructure?

It’s not just about Oil Stocks

To be sure, an attack on Iran’s oil infrastructure would not be enough to push oil prices over $85 a barrel.  That being said, if Iran were to retaliate by disrupting traffic in the Strait of Hormuz, this could be a trigger for a spike in oil prices.  After all, about 20 percent of the world’s supply of oil moves through the Strait of Hormuz.  So that could quickly push oil prices up over $90 a barrel.

But here’s the thing…

No matter how you slice it, tensions between Iran and Israel are unlikely to let up anytime soon.  And that alone will be enough to keep oil prices from slipping below $70.  Add an attack on Iran’s oil infrastructure, and you’re up over $78 a barrel.  Then, if Iran blocks traffic in the Strait of Hormuz, you’re easily up to $85 a barrel. 

In other words, while there’s no guarantee any of this will actually happen, you can guarantee that Iran and Israel are not going to get together at an ayahuasca ceremony to “work things out.”  Which is why I highly recommend that if you don’t already have some exposure to the oil markets, you should add some oil stocks to your portfolio now.

My favorite is Civitas Resources (NYSE: CIVI), but there are certainly plenty to choose from, including…

• Eni (NYSE: E)
• Valero Energy (NYSE: VLO)
• Diamondback Energy (NASDAQ: FANG)

Although, my favorite way to play the rising price in oil is through new technologies that allow oil companies to increase output without drilling additional wells.  This is particularly important for U.S. oil producers that need to pick up any slack as a result of disruptions to the flow of oil in the Middle East.

One technology that’s really crushing it right now is this new drill that essentially doubles or even triples oil output from the same piece of land.

It basically allows oil companies to get a second oil well — absolutely free. 

As well, it offers a massive 50% reduction in drilling time and a 100% boost in production capacity.  It even costs as much as $10 million less than traditional drilling technology, so it’s no-brainer.  Which is why I’m including a link to this new report which details how the technology works, and more importantly, gives you access to the name of this company and its ticker symbol.  

Bottom line: things are not going to get better in the Middle East.  In fact, they’re only going to get worse.  And while I would love nothing more than to see real peace in the Middle East, in the absence of such peace, you might as well turn this crisis into an opportunity.  And here’s how you can do that right now.

To a new way of life and a new generation of wealth…

Jeff Siegel

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Jeff is the founder and managing editor of Green Chip Stocks. For more on Jeff, go to his editor’s page.

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