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According to a report in Bloomberg, oil is selling in record territory on worries that Turkey may invade Northern Iraq. Uncertainty is never a good thing when it comes to business, and when it's related to oil prices it rocks the world, and potentially the world's economy.
- Turkish Prime Minister Tayyip Erdogan told reporters his country would pursue the Kurdistan Workers Party, or PKK, regardless of diplomatic costs, according to an Agence France-Presse report. Northern Iraq holds some of its largest oil fields, including Kirkuk, the source of much of Iraq's exports.
- "If they start shelling across the border, the price is going to go up,'' said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. "When there is tension in the world, oil gets bid up.''
This unpredictability in the region has kept oil prices up even though demand is not as strong as speculators anticipated during its rise over the last few years. For me, this is an unfortunate irony as I read this news after returning from a breakfast meeting where I told an associate, "Oil will be $60 a barrel before it is $100, unless war breaks out somewhere." This is very sad to me, because just the possibilty of war creates a rise in oil prices that I envision causes more pain for those at the bottom of the economic strata barely getting by now.
In the meantime, PetroChina ADR (NYSE: PTR), which I have been covering frequently, has been flying upward and as yet knows no bounds. It is up about $18.00 per share, topping the $211 mark, and reaching new highs almost daily. This is despite the reports of Warren Buffett selling his shares on a regular basis. In general, when Buffett of Berkshire Hathaway (NYSE: BRK.A) is selling, who wants to buy? But in this case it seems almost everyone does.
Checking other oil stocks this morning, I found they are up or down pennies, so the Chinese stocks continue to rise in their own new world.
Disclosure: I own both BRK.B and PTR.
To find potential opportunities and verify my track record, read Chasing Value or Serious Money.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.
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