In 10 Seconds You’ll Probably Forget This Headline
We live in the age of Twitter.
Or as I call it — the age of the ten second attention span.
People are willing to read a headline, maybe skim a story, and then quickly swipe to the next one.
Nothing gets more than ten seconds of our attention.
Case in point, the unprecedented attack on Saudi Arabia’s most important oil facility. Check that, the world’s single most important oil facility.
This attack was the biggest news in the oil market in 50 years. It knocked 5.7 million barrels of oil off production.
Yet, within 24 hours this jaw-dropping event wasn’t even trending on Twitter.
And after the initial price spike, the price of oil has retreated.
Big mistake. This is not a ten second story.
The market is far too relaxed about what has happened, and what is likely coming.
What Will the World’s Most Dangerous Man Do?
From the day he assumed de facto power in Saudi Arabia, we have been tracking the Saudi Crown Prince Mohammed bin Salman here at The Daily Edge.
We have watched his astounding greed as he looted his country…
Using the Saudi oil wealth, the Crown Prince bought the world’s most expensive home, the 54,000 square foot Chateau Louis XIV castle in France, for $300 million.
He bought the world’s most expensive painting, Leonardo da Vinci’s Salvator Mundi, for $450 million.
And then he bought the world’s most expensive yacht, paying $500 million for Russian tycoon Yuri Shefler’s 440-foot ship named the Serene.
I’m not joking — after placing austerity measures on the Saudi people, the Crown Prince spent $1.25 billion on these three trinkets.
And these are just three purchases that we know of!
Along the way, he also locked down dozens of his wealthy Saudi countrymen under the guise of a corruption crackdown.
Corruption crackdown… with this guy leading it?
That crackdown was a massive shakedown of the Saudi elite by the Crown Prince for personal gain.
Then there is the horrific murder of journalist Jamal Khashoggi… the even more horrific non-stop Saudi bombing of Yemen… and a human rights record that would make a hardened dictator blush.
Now here is my point…
The Crown Prince is now the sole individual who the world is counting on to keep the Middle East out of all-out war. (And to keep oil prices out of triple digits.)
Iran, his greatest enemy, has been named as the party that attacked the crown jewel Saudi oil facility. Germany, France, Britain and the United States all agree.
Imagine what the United States would have already done if Iran had bombed the New York Stock Exchange…
Why should we then expect that the Crown Prince wouldn’t also react with extreme force?
Yet that is what the oil market is pricing right now — a complete shoulder shrug, non-response from the “World’s Most Dangerous Man.”
Combined, Saudi Arabia and Iran account for almost 16 million barrels per day of oil producing capability — almost 16% of the world’s total.
But an all-out war threatens even more than that.
Production from Iraq, Kuwait, and the United Arab Emirates also flows through the Strait of Hormuz — which means that 30% of global production could be at risk.
If the World’s Most Dangerous Man goes on the attack, oil isn’t going up 10% — it’s going to double or triple. We really have no idea how high it could go.
The risk of this has never been higher.
Yet, the world’s ten second Twitter attention span is focused elsewhere.
This Giant Yield Will Keep Your Attention
While the Middle East has never been closer to blowing up, many oil producer share prices have never been cheaper.
Case in point: Canadian oil producer Whitecap Resources (SPGYF) which currently sports an easily sustainable 7.3% dividend yield.
If the attack on the Saudi crown jewel can’t keep Twitter’s attention, just imagine how difficult it is for an off-the-radar Canadian oil producer like Whitecap.
At current oil prices, Whitecap not only pays a 7.3% dividend to shareholders, but also will generate $135 million of excess cash flow over the course of the year.
This is cash flow the company can use to improve its already rock-solid balance sheet, repurchase shares, or increase the dividend.
To be clear, this sustainable 7.3% dividend is what Whitecap offers at current oil prices…
But if the World’s Most Dangerous Man takes direct action against Iran, that dividend is going to increase significantly.
The Middle East risk has never been higher. Shares of Whitecap Resources offer protection against that risk and also a juicy 7.3% income stream.
Here’s to looking through the windshield,
Financial Analyst, The Daily Edge