Why? Because it could make us all rich...
Oil is now just a whisker shy of $120 - some even think it will hit $150 this year. So, forget the bleating about pain at the pump - the rising price of black gold should be a shot in the arm for the Profit Hunter portfolio...
Why the mainstream media are utter fools
Oil’s new record high has a lot to do with the strike. Not the one up in Scotland that is getting our media hacks so excited. I’m talking about the one that’s going on in Nigeria and isn’t getting a mention in the mainstream media.
Nigeria is the biggest oil producer in all of Africa; it normally pumps out some 1.96 million barrels of oil per day.
And a lot of that ends-up going to the United States.
In fact, the Americans get about 10%-15% of the oil they need from Nigeria. So any serious disruption to that supply is has a major impact on the price of oil.
Right now, Washington insiders are probably ripping their hair out because Nigeria’s oil production has plunged by nearly 50%... they know the implications for the oil price.
It started with a strike at Exxon’s refinery in the country last Thursday. They’re demanding higher pay. You can’t blame them. With oil prices at a record high and oil companies making record profits, they probably believe that they are entitled to record pay... maybe they are...I haven’t a clue. But their strike wiped about 850,000 barrels off Nigeria’s output instantly.
Strikes are the smallest problem...
That’s on top of the at least 169,000 barrels per day of oil output that Shell is already losing from attacks on its pipelines by the militant group MEND - that’s the Movement for the Emancipation of the Niger Delta.
The group from local tribes is fighting against what they see as a raw deal as the bulk of the oil-wealth being generated in the Niger Delta gets diverted to corrupt officials, the central government and the oil companies.
They’ve been bombing pipelines since 2006 and things may soon get a lot worse. It said:
"Our candid advice to the oil majors is that they should not waste their time repairing any lines as we will continue to sabotage them. We have time on our side and there is so much to be destroyed."
The OPEC oil exporters’ cartel isn’t helping to calm things down either. Its President Chakib Khelil says that there is more than enough oil around at the moment and they won't consider increasing crude output before September.
As far as I can see, they’re doing just about everything they can to keep the price of oil high right now and you can almost imagine him rubbing his hands at the thought.
There’s no doubt about it - high oil prices are here to stay
High oil prices are excellent news for the Gulf merchant bank we are invested in. They speed up the transfer of money to the oil-exporting Persian Gulf countries. Then our bank comes along and hoovers them up to invest in undervalued Western assets. But the big winner in our portfolio from Nigeria’s oil woes is a certain pan-African conglomerate we’re currently invested in.
We aren’t invested in Nigeria, but I keep a very close eye on what goes on there because we’re seeing some remarkable developments on their business front (More about that some other time.) But instability in that country is pushing the global energy giants towards the other two other major oil producers in West Africa are also going to be big winners from this.
Our pan-African conglomerate isn’t in Nigeria - but it has major operations in Angola and Equatorial Guinea. Those countries are sub-Saharan Africa’s second and third biggest oil exporters and they haven’t aren’t facing the sort of armed insurgency and unrest that Nigeria does. So, they’re prime candidates for more investment as the global energy giants scour Africa for oil.
It already owns the major port in Equatorial Guinea that is emerging as the main oil shipping hub in the Gulf of Guinea. But it’s also sitting on another virtual goldmine...in Angola.
It’s growing nearly twelve times faster than the UK
With the price of oil hitting new records and international investors pouring money into Angola like there’s no tomorrow, the country is in middle of a massive economic boom.
Its economy zoomed ahead by 23.1% last year and by 18.6% the year before. There’s no end in sight to boom either. The IMF is predicting that it’s going to grow by a whopping 27.2% this year. That’s nearly 12 times as fast as the UK economy.
All that growth is creating massive infrastructure bottlenecks in the country though. In the capital, Luanda, ships can sit in the harbour for three months before they get a chance to clear their cargoes. And that’s where our African conglomerate has spotted another brilliant opportunity.
They’ve come up with a solution to this white hot economy’s congested ports. It’s building a "dry port" in the capital. You see, they’re working with local partners to set up a massive logistics centre, close to the airport and the major road network.
This new terminal should dramatically slash the congestion at the country’s ports by allowing designated containers and cargoes to be rapidly offloaded at the port and then delivered and cleared by customs based at ELT for delivery to customers across the country.
Of course, our pan-African play already owns a full-service passenger and cargo airline in Angola, so the move makes brilliant sense.
Angola is about as far away from the mainstream news as you can get, but fortunes are being made out there. Our investment gives us a chance to play that. We aren’t directly invested in Africa’s oil story right now. Instead we’re taking the route of "selling the shovels to the gold miners." We’re investing in the infrastructure that is going to allow them to bring that oil to the market.
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Regards
Manraaj Singh
Profit Hunter
Editor
