Oil & Energy Investor by Dr. Kent Moors

The Persian Gulf Quandary

by | published November 8th, 2019

When I was younger, I played a lot of chess.

The version of the game that was most demanding was called “fairy chess.” Here, the moves pieces can make change as the game proceeds, further complicated by what our opponent does. If a third dimension is then added to the board, the calculations needed become almost limitless.

What is currently unfolding in the Gulf reminds me of my earlier years of playing chess; of all the recent meetings I had in London, the most disquieting occurred over the ongoing crisis in the Persian Gulf.

We have entered a period in which all of the elements that produced previous attacks on oil tankers, pipelines, and fields/processing locations are still present. The added problem is the level of uncertainty surrounding them.

The most recent episode occurred on October 11, sixty miles from Jeddah off of the western coast of Saudi Arabia.

This time it was an Iranian target.

The tanker Sabity was hit by two missiles some twenty minutes apart. The damage resulted in oil spills, but no injuries to the crew, according to a statement from the National Iranian Oil Company.

At the time, my Saudi contacts did not respond to requests for comment, while those at the National Iranian Oil Company (NIOC) expressed an unusual restraint.

The situation continues today, almost a month after the episode

Why Energy Investing Will Never be the Same

by | published November 6th, 2019

Our plane was still in route from Heathrow to Miami International when the messages began.

One of my six London meetings over the past week had been with principals in The City (London’s financial district) to compare notes on the impending initial placement offer (IPO) for a minority position in giant Saudi Aramco.

What started out as one of the most anticipated offers in memory when it was first unveiled more than two years ago, has been subject to delay and adverse publicity hitting the country, and its young heir apparent Crown Prince Mohammad bin Salman (MbS).

Among my network of contacts, word had been circulating at the end of last week about some significant problems once again surfacing concerning the IPO. Despite the hype about expediting the sale, there had been renewed indications that it would again be delayed.

This development also had a last-minute effect on my earlier meeting in New York City. On October 18, I discussed some main takeaways from the Saudi decision in an Oil & Energy Investor column written while I was flying back to Florida (read it right here).

But there is a deeper factor in all of this, and it cuts to the core of the current Persian Gulf crisis.

In the attempt to attract an acceptable price for the sale of a minority stake in the world’s largest state-owned oil company, Riyadh needs to persuade the global investment community that it can sustain enough security for its fixed oil production and processing assets.

And that, in turn, requires control it no longer has.