Oil Prices Soar
The protests in Egypt ended mostly the way the protestors desired: with the end of the Mubarak regime and hope that a better, more democratic government will rule.
The resolution to the protests in Libya do not look as though they will end with such a positive outcome.
250 are already reported dead and leader Muammar Qaddafi's son has vowed that "rivers of blood will flow." The conflict is already being called a low level civil war.
But like Egypt, the military is the wild card. In the case of Egypt, the military clearly never backed Mubarak. In Libya, the military has sided with Qaddafi. But there are signs that troops are deserting. Two Libyan planes sought asylum in Malta rather than bomb Libyan civilians. Other planes appear to have carried out the orders.
Some Libyan officials and several of its ambassadors have resigned their positions and sided with the protestors.
However the Libyan situation plays out, it's probably going to take a while. And that has some serious implications for oil prices...
*****Oil prices made a huge move on Monday, while the U.S. markets were closed. Crude prices were 8%, more than $7, to $93 a barrel.
As I wrote on Friday:
If you don’t own oil stocks already, you absolutely must when there's unrest in the Middle East. I think we've only seen the beginning of oil prices reacting to the unrest in the Middle East. There is a very real possibility that oil prices will move significantly higher before this whole scenario plays out.
$93 is a pretty big move. But there's no reason oil can't move above $100 a barrel, so long as the Libyan situation is unresolved. International oil companies like Shell and BP (NYSE:BP) have shut down Libyan operations and flown their crews to safety.
The longer there are supply disruptions, the higher oil prices will rise.
*****As investors, we need to be focused on uncovering which oil stocks will be the most sensitive to higher oil prices.
Shell and BP aren't the only companies in Libya. Occidental (NYSE:OXY), ConocoPhillips (NYSE:CON) and Marathon (NYSE:MRO) all have operations in Libya. As of this writing, none of these have announced production stoppages, but that could change at any time.
Oil companies that face potential supply disruptions won't be the best performers as oil prices move higher. Instead, smaller companies that can leverage higher prices will be the best bets.
I would also recommend that you seek out oil stocks in politically stable countries, like the U.S. or Canada. Canada has oil sands, and the U.S. has the Gulf of Mexico and the Bakken oil pool.
Energy World Profits readers have made some outstanding gains from Bakken oil producers. And I just recommended an emerging Bakken player on Monday. Shares are already up 12% and I think there's at least 25% more gains coming as this stock reaches a fair valuation. But if oil prices spike higher, shares could move much higher. For more, click HERE.
