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Oil Prices to Remain Above $100 | ||
While investors are focused on events in Japan, oil prices have crept back above $100 a barrel as tension in the Middle East escalates. The U.S. is now supporting a "no-fly zone" over Libya, and perhaps even strategic air strikes. And the government in Bahrain has apparently invited the Saudi Arabian military to help it suppress protests in Bahrain. Iranian leaders are complaining to the U.N. about the presence of Saudi troops in Bahrain; this is mostly fueled by the fact that the protesters in Bahrain are Shiite Muslims, like the Iranians, while Bahrain’s royal family is Sunni. This may seem to Westerners like splitting hairs, but to them this is significant. Saudi Arabia and Iran are the biggest oil producers in the Middle East. Tension between the two countries has oil investors expecting higher prices. Investors are advised to seek oil stocks in politically stable countries, like the U.S. or Canada. The Bakken oil pool in the western United States contains at least 4.5 billions of barrels of oil and has the added bonus of being far away from environmentally and politically sensitive areas like the Gulf of Mexico. One $7 Bakken oil company is expected to more than double earnings this year and next year as it dramatically increases production rates. Currently undervalued to its peers, this company will likely see earnings estimates and share prices rises as oil prices remain high. | ||
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