Opportunity in Crude Oil stocks

Issue No. 200 – Sat 08 Feb 2025

 Spot Gold advances significantly in the past 2 weeks. A record high of US$2,885 per ounce is reached in NY morning of Fri 07 Feb 2025, but it eases back to $2,861 at close.

 We expect Gold to fall back in the coming week commencing Mon 10 Feb 2025.

Thereafter (from week starting Mon 17 Feb 2025) Gold resumes its long term up-trend.

 We now discuss an opportunity to invest in Crude Oil stocks.

 Six (6) of the world’s top oil-producing countries (Saudi Arabia, Iran, Iraq, UAE and Kuwait) are at the border of the Persian Gulf, as does Qatar, the world’s largest liquefied natural gas exporter. The Strait of Hormuz is their only sea route to the open ocean and to world markets. At its narrowest point, the space available for shipping lanes is just 3.2 kilometers wide. Sealing off this Strait will severely disrupt the Crude Oil market.

 

It is likely that US (and Israel) will be at war with Iran. In such an eventuality (which we believe is possible in 2025 Q2), Iran will block the Strait of Hormuz, and Crude Oil will triple or quadruple.

Accordingly, at close of Fri 07 Feb 2025, we have bought 4 units of OXY June Call options, with Strike price of US$55 and Expiry date on 20 June 2025. Our cost is US$0.90 per unit.

Total Cost = US$0.90 x 400 = US$360.  1 Option unit = 100 shares.

OXY is the short name for Occidental Petroleum Corporation. Warren Buffett has bought a lot of the shares over the past 6 months.

The share’s closing price is US$46.78.

We expect the Middle East War to start in April 2025, and Crude Oil stocks will soar to the sky.

We will use astronomical phenomena to explain the Middle East War in our next blog post.

INVESTMENT CORNER

We endeavor to demonstrate how an initial investment of US$10,000 can grow 10 times to US$100,000 over a period of 1.1/2 years (from Jan 2025 to June 2026). The stock we use is KGC (Kinross Gold Corporation) together with its related Call Options. The prices are the closing prices on Friday. For the sake of simplicity, small income and expenses are ignored. To check these prices, please search “KGC Option Chain”.

We also speculate a bit on the Options of other stocks. For example, we bought OXY call options on Fri 07 Feb 2025.

We are not investment advisors. Readers are not to follow our strategy, and readers should seek independent investment advice before taking any action.

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