Saudi Arabia’s Mohammed bin Salman — AKA the World’s Most Dangerous Man — Gets Attacked
I told you he was “The World’s Most Dangerous Man” over two years ago…
I was referring to the young Saudi Prince Mohammed bin Salman — who had then just assumed de facto power in Saudi Arabia.
What I envisioned then was this young man’s aggressive policies would push the Middle East over the edge.
I concluded my thoughts on the Crown Prince with this:
“It almost makes you wonder if $44 per barrel oil might look like quite a bargain at some point in the near future…”
Now look where we are.
Saudi Arabia’s most important oil facility is on fire.
An astounding 5.7 million barrels of Saudi oil production are offline.
On Monday, oil prices surged 15%, the single biggest price spike in history.
Saudi Arabia, the United States and Iran are on the brink of all-out war.
What we feared has come to pass.
And how the world views the risk to our oil security has forever rightfully changed.
This Is Just the Beginning — Not the End
I wonder what the Crown Prince actually thought might happen?
It was after all, the Crown Prince who was the driving force behind Saudi Arabia going to war with Iranian-backed Houthi rebels in Yemen.
If you haven’t been following the Crown Prince’s war in Yemen, what you need to know is that it has created the world’s worst humanitarian crisis.
The Crown Prince’s Yemen war has resulted in:
- 2 million civilians being left homeless
- 22 million people in need of assistance
- 8 million people facing famine
- 1 million people affected with cholera
- Tens upon tens of thousands of civilian deaths
Call me crazy, but given that the Crown Prince has ruined millions of lives, I don’t find it shocking that his most-important oil facility is now badly damaged.
And mark my words, this successful attack on Saudi oil infrastructure won’t be the last.
Far from it. This is in fact the beginning.
This drone attack cost the militants behind it zero lives. This kind of attack is repeatable, and because of it, we now know that all of Saudi Arabia is within reach.
These drones were able to score a highly precise direct hit on Saudi Arabia’s most vigilantly protected oil facility. If the Saudis can’t protect this, just imagine what drone attacks can do with the rest of the country’s vast oil infrastructure.
Just think of the targets available for these drones…
How would you like to be on a Saudi oil tanker carrying 2 million barrels of oil in the middle of the Strait of Hormuz today?
Or anywhere near one of Saudi’s 17,000 kilometers of oil pipelines that cross the country carrying millions of barrels of oil?
How could Saudi Arabia ever protect all of that infrastructure if they can’t even protect their single-most important facility?
The Saudis can’t. We now know that their enemies can reach everything.
This attack that knocked 5.7 million barrels of Saudi oil production offline isn’t just THE BIG ONE…
It is the FIRST BIG ONE… with more to come.
The Response Will Only Make Things Worse
The Crown Prince has made millions of enemies.
Finally, those enemies struck a blow that really hurts him.
Now we await the response from this young hothead.
What will he do?
We know who he and his American allies are blaming for the attack.
Just yesterday Saudi officials officially accused Iran — or one of its proxies — of launching the drones and cruise missiles from a location north of Saudi Arabia.
The Crown Prince has to be especially mad because the timing of this attack really stinks. He was trying to get the long-delayed IPO of his crown jewel Saudi Aramco off the ground.
Now the value of that asset has taken a hit.
We also know that the Crown Prince is going to do something to respond to this attack — he has to. He can’t let the world see that there is no accountability for this sort of damage to the heart of Saudi Arabia.
Whatever he chooses to do, we know one thing for certain.
It will result in him making more enemies for Saudi Arabia. And it will result in his existing enemies redoubling their efforts to inflict more damage on Saudi oil infrastructure.
For investors the takeaway is this: the game has changed.
Even if the Saudis restore production quickly this time, the market now has to price in the next attack.
The threat of an oil spike has returned. Geopolitical risk is now going to be factored into the price of oil.
The good news is that many oil producer stocks whose operations are safely located in North America are dirt cheap.
Next week, I’m going to bring you one that is incredibly undervalued and has a massive dividend yield.
The “World’s Most Dangerous Man” is making it profitable to own oil stocks again.
Here’s to looking through the windshield,
Financial Analyst, The Daily Edge