Weekend: Of Israel, Iran and $150 Oil

Next year is going to be very interesting.

The presidential primaries and general election will be more melodramatic than an episode of Jersey Shore.

MTV producers in their wildest dreams couldn’t come up with some of the stuff we’ve seen already: Ni*gerhead, vaccine-induced retardation, Herman Cain.

Wait ‘til it’s down to just two.

But 2012 will be interesting for more than the free entertainment of the election…

After all, either winner will be controlled by special interests, as has been the tradition for decades.

It’ll be fascinating because oil’s already at $100. Brent is at $108.

The Wall Street Journal reported last week that both India and China are increasing their reserves, and that will put upward pressure on prices.

India said it’s more than tripling the size of its reserve from 39 million to 132 million barrels.

China’s going to 500 million barrels from 103 million.

That’ll add a nice 490 million barrels of global demand over the next few years…

Oh, and Iran’s threatening to block the daily flow of 15 million barrels through the Strait of Hormuz. The Telegraph notes the implications:

If the ayatollahs’ carried out their threat, Iran could, at a stroke, choke the main artery for the West’s energy supplies.

The Iranians have been planning for such an eventuality for the past twenty years. Unlike the late 1980s, the last time Iran seriously disrupted shipping passing through the Gulf, Iran now has the equipment, in terms of anti-ship missiles, to enforce the threat.

The U.S. Navy, which has two aircraft carrier groups permanently stationed in the area, would, of course, be forced to intervene, thereby leading to open hostilities between Washington and Tehran.

But if you think that is an alarming prospect, just imagine the mayhem that would erupt if Israel decided that it had had enough of Iran’s prevarication over its nuclear program and decided to launch unilateral air strikes to knock out Iran’s nuclear facilities.

Happy New Year!

Hello $150

High oil isn’t the enemy. It’s a profit catalyst.

When geopolitics send the price soaring, production costs stay the same for those with access to oil.

And of course, the Bakken comes to mind…

It’s awash in oil at a time when global supplies are in question.

It won’t be a global panacea, but it will be a hell of an investment as oil ticks higher.

The companies operating there are profitable now, so you’ll surely want to own them before oil spikes any higher — and takes share prices along with it.

Call it like you see it,

Nick Hodge

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