Permian Resources Targets Gains as Iran War Triggers Oil Shock
Contributed Opinion

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It appears the market is finally waking up to the severity and the mess the U.S has caused in kicking this Iranian hornet's nest.

I have been warning since soon after the beginning of this war that it would drag on, and the oil market was not pricing in reality, and equity and bond markets have been complacent. Oil jumped to highs yesterday, and I wanted to wait until this morning to ensure that oil did not reverse and give back gains.

I have been commenting for some time that I expect oil to go up to US$150 and probably higher as this crisis drags on; it has now started the next leg up.

In my issue a month ago, March 27, I said, "I think the only sure bet is that this crisis is going to drag on for months. Oil is not pricing in that outcome yet". There is no end in sight yet!

On Tuesday, reports highlighted Bessent describing IRGC leaders as now "trapped like drowning rats" amid the enduring U.S. naval blockade of Iranian ports, which will soon result in gasoline shortages, anger & uprising.

Bessent is spewing pure BS as Iran has 12 refineries and all kinds of gasoline. Their prices are about the lowest in the world at US$0.11 a gallon or about US$0.03 a liter. Iran was a big exporter of gasoline, so in reality, it is the rest of the world and not Iran that will suffer gasoline shortages.

It sounds like Putin is the only leader who has a clue. Putin tells FM Araghchi that he's been in contact with the new Supreme Leader, and says Iran is fighting for 'sovereignty'.

Iran wants to inflict so much pain on the world by closing the Strait of Hormuz that they will not be attacked again, risking another strait closure. Iran is seeking security guarantees and believes it has to become a nuclear power to have its sovereignty. It is obvious that Iran and the U.S. are miles apart, and this conflict is not ending soon.

More pain means a lot higher oil prices and shortages around the world, and it is coming

Maybe this is what is waking up the oil market. A headline yesterday at CNBC said a Jet Fuel Bidding War was Breaking Out.

 Benedict George, head of European product pricing at Argus. "While we can import more, and we are, from the U.S. and Nigeria, we have to fight for every cargo that's going to come," George told CNBC's "Squawk Box Europe" on Monday. "We have to fight against Singapore, against Australia — and the price...just goes higher and higher."

The U.S. is emerging as a key source for Europe. U.S. global exports of jet fuel have gone stratospheric, soaring to a record 442,000 barrels a day in early April, or about 372,000 barrels over a four-week average, according to SocGen.

That's about 200,000 barrels a day more than the five-year norm of 172,000 barrels a day. The U.S. has historically exported about half of this to its neighbors, Mexico, Canada, and Panama — but now Europe is battling for this jet fuel too.

This is important because the U.S., as the biggest oil producer and with a large refining capacity, will sell at the highest price. This could result in shortages in the U.S. Keep an eye open for the U.S. to implement export controls, as this will be a signal that the crisis is getting worse. This would be bad news for Canada, too.

Canada sends a lot of oil to the U.S. and gets refined gasoline, diesel, and jet fuel in return. Another important factor is that four Canadian refineries in Quebec and Eastern Canada rely on U.S. and Middle East oil. They will have to compete with the rest of the world.

Canadian Airlines has been canceling all kinds of flights to deal with high jet fuel prices. This will only get worse with travel, and the economic stimulus it provides will decline further and further. Canadians and Americans will be forced to cut back in numerous areas as they have to divert more $$ into fuel.

Eventually, the oil and gas stocks will catch more bids and attention. I suggested Permian as a good oil/war play, and since that time, it has basically gone sideways.

Permian Resources 

^{Recent Price - US$21.55}

^{Entry Price - US$9.23}

^{Opinion – Buy}

Permian Resources Corp. (PR:NYSE) will announce its quarterly results on May 6 after the market, and we will see improved cash flow and earnings.

Currently, the technical indicators and moving averages suggest a Strong Buy.

The stock is up against resistance, poised to break out, and On Balance Volume shows strong accumulation since March.