It was difficult to write about anything in the early hours of this morning.
Between the massive three-alarm fires that burned through a Baltimore Senior Center that was under construction, the tragic images that were taken a few miles away from where I stand now, or even the phalanx of National Guardsmen that now line the streets downtown, the striking absurdity of destroying your own community wasn’t lost on me.
But while the fires raged here, my city wasn’t the only place burning — another community was on the verge of a civil war. Nearly 8,000 miles away, fighting intensified across Yemen as a Saudi-led alliance continued to bomb the capital of Sanaa.
This internal war, however, has been building for a very long time.
Civil War Strikes OPEC?
Make no mistake about it: What we’re witnessing in Yemen today is nothing more than a proxy war between two of OPEC’s biggest members.
Charges are flying on both sides, too. The Saudis are accusing Iran of arming and training the Houthis, while Iran fires right back, arguing that the Saudi air strikes are a much more egregious case of intervention. The Ayatollah went so far as to even suggest the Saudi-led air strikes were on par with a major crime, even genocide.
No matter which side you choose to believe, we both know things won’t end well. In fact, the latest bit of troubling news crossed my desk regarding a Saudi television report that Iran had seized a U.S. cargo vessel.
But is this more than another round of Sunni vs. Shia?
Even though Yemen isn’t counted among the world’s largest oil-producing countries, Saudi Arabia’s southern neighbor is much more important for global supply stability than you might first think.
The Other Oil Choke Point
In the past, the center of attention during times of Middle East conflict has been the Strait of Hormuz. That’s hardly surprising considering one-third of the world’s seaborne petroleum trade uses that route.
In 2011, an average of 17 million barrels of crude oil passed through the strait on a daily basis.
What you may not realize is that there’s a slightly lesser-known choke point on the Red Sea side of Saudi Arabia: the Bab el-Mandeb Strait.
Pictured on the right, this strait is approximately 18 miles wide at its narrowest point.
More important, however, is that oil traffic through this choke point has been increasing steadily — by nearly 75% during the last five years:
Last year, petroleum transit through the Bab el-Mandeb Strait averaged roughly 4.7 million barrels per day.
And it’s here where Iran is poised to clash with the United States. Some of you might even remember last week, when news circulated that the U.S. was sending the USS Theodore from the Persian Gulf to the Gulf of Aden. Its intent was to cut off Iranian supplies from the Houthi rebels.
The strife within OPEC, however, is actually good news for any investor thinking about putting a dime into the U.S. energy sector.
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The Oil War is Over: Meet the Super Shale
Let me be clear: I am extremely bullish on oil.
And I’m sure many of you that have been following oil prices since they began crashing last summer can’t help but see a potential bottom recently.
I’m not suggesting a sudden price spike back to triple digits, but the latest seizure is a perfect example of the effect this proxy war between Saudi Arabia and Iran can have on crude. Brent crude is already trading north of $65 per barrel, while WTI prices approach $60/bbl.
And despite the fact that the American Petroleum Institute is expecting another build in crude inventories this week, we would be remiss if we didn’t keep our eye on the long term here.
Perhaps it’s time to take a look at the oil fields that will inevitably drive production higher once the supply glut eases.
Not surprisingly, the EIA just gave us a hint of where these fields are after posting its list of the 100 largest oil fields in the United States. Two particular fields that top this list — the Eagleville and Briscoe Range — stand out immediately. Both are not only located in the Eagle Ford Shale in South Texas, but they also make the EIA’s top 20 when it comes to natural gas fields.
Don’t forget that a few years ago, neither one was even considered for the top 100 list. In other words, these two fields overtook the mighty Prudhoe Bay oil field in Alaska, which stood proudly on top of the list in 2009.
Overall, the United States boosted its proved reserves of crude oil and lease condensate by 63.6% between 2009 and 2013.
Thing is, there aren’t many of you that can stomach the same kind of risk billionaire investors can.
Fortunately, you don’t have to.
My readers and I plan on taking advantage of a simple investment that offers the same kind of massive upside as oil rallies during the latter half of 2015.
And I want you to join us when we do.
Keep an eye out for my new investment report regarding the North American Super Shale. It’ll hit your inboxes this Friday morning.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
Keith’s keen trading acumen and investment research also extend all the way into the complex biotech sector, where he and his readers take advantage of the newest and most groundbreaking medical therapies being developed by nearly 1,000 biotech companies. His network includes hundreds of experts, from M.D.s and Ph.D.s to lab scientists grinding out the latest medical technology and treatments. You can join his vast investment community and target the most profitable biotech stocks in Keith’s Topline Trader advisory newsletter.
