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Attack on Saudi oil infrastructure and the future of oil prices



Following an event involving attacks on two separate Aramco oil facilities in Saudi Arabia earlier this month, oil prices saw an immediate surge. While prices have softened significantly since the attacks, the cost of raw materials is still higher than before the attacks. The immediate and strong reaction of the market to a possible drop in supply underlines the fragile nature evident in the oil markets and pricing.

Any additional tensions or uncertainties in the region may push prices much higher in the future. This scenario will benefit the US-based Parsley Energy (NYSE: PE) and given the strong push against Iran by many US consumers and policy experts, those interested in investing need to pay reasonable attention .

  Stable drilling platform

Image source: Getty Images

Promising Frontier

Parsley Energy is an independent oil and gas company located in the very rich Permian Basin of Texas and New Mexico, and was founded in 2008 The company's earnings for the second quarter ending June 30, 201

9 were $ 0.499B, up 6.57% year-over-year. For the twelve months ending June 30, 2019, revenue was $ 1,889, up 33.9% year over year. The profit margin of parsley as of June 30, 2019 is 13.69%. Also, according to the results of the second quarter of parsley, the business is booming. "Net oil production increased by 10% quarter-on-quarter and 28% year-over-year to 86.6MBo per day. Total net production averaged 140.1 BBoe per day," a recent press release said. These improvements are remarkable, as continued higher production indicates stronger future growth.

Parsley management also intends to increase free cash flow, an important factor that every investor should consider. The discipline of the company's free cash flow is admirable and assuming that oil prices remain fairly stable or rise in the future, Parsley's finances will only improve due to increased profit potential. In light of that, in August, parsley announced the start of a $ 0.03 quarterly dividend, which will be paid to investors this month. Both factors should encourage investor optimism in both financial health and growth opportunities in Parsley.

However, uncertainty is still emerging

However, many factors affect oil prices. They have little to do with the natural emergence of supply and demand or free markets. Governments, states and even corporations can interfere in the markets, mostly on the basis of geopolitical interest and money. This is a very complex issue and these unknown factors certainly play an important role in the global oil markets. Therefore, it is always wise to look at the big picture instead of focusing on numbers alone. This way, regardless of personal or political conflict, one can make better decisions about personal finances and investments.

Given the increasingly uncertain geopolitical climate, variability seems to be the rule of the day. Threats of more war in the Middle East over the Iran-Saudi conflict, trade wars and heightened tensions between Iran and its other adversaries may arise, leading to more chaos in the oil markets. If more attacks occur or the war against Iran becomes a reality, supplies may be at risk, not just temporarily. In this environment, in my opinion, oil prices would increase significantly and this would certainly generate greater demand for US-based parsley energy, which is already positioned for long-term growth.


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