BP plc (ADR) (BP), Royal Dutch Shell plc (ADR) (RDS.A), Apache Corporation (APA): Egypt’s Turmoil Could Lead to Rocky Oil Markets

Another element to consider as well is a sustained period where the Suez Canal is shut down. If this were the case, it could be a temporary boost for tanker fleets. LNG carriers like Teekay LNG Partners L.P. (NYSE:TGP), the third-largest liquefied natural gas fleet, would be well positioned to benefit from the increased ship times. Day rates for LNG carriers are about $100,000 per day, and the extra eight to 15 days of shipping time could be a nice pad to revenue.

Oil tankers could also see a benefit as well. With potential of the SUMED pipeline being shut down, it would mean that tankers would need to increase traffic by 2 million barrels per day and increase its shipment times as much as LNG tankers. Norway’s Frontline Ltd (NYSE:FRO), the world’s largest oil tanker fleet, has day rates of about $25,000 for its oil carriers, so it’s not as much of a win as LNG carriers. Also, higher fuel prices for all shipments will eat into that revenue boost.

What a Fool believes
For producers and shippers alike, it all comes down to the severity and duration of unrest in Egypt. More than likely, these will be temporary situations that could affect revenue for a while. It is hard to see either situation completely changing an investment thesis for any of these companies unless some completely drastic measure happens in Egypt in the next couple months.

More than anything, events like this play on investor’s emotional reactions. Fear of higher oil prices leads us to overvalue the threat. Just look back at the Libya example from two years ago. The biggest run-up in oil prices came before any civil unrest. As the civil war was prolonged and oil production in the country dropped by over 1 million barrels per day, global oil prices steadily fell for the rest of the year.

The article Egypt’s Turmoil Could Lead to Rocky Oil Markets originally appeared on Fool.com and is written by Tyler Crowe.

Fool contributor Tyler Crowe has no position in any stocks mentioned. You can follow him at Fool.com under the handle TMFDirtyBird, on Google +, or on Twitter, @TylerCroweFool.The Motley Fool owns shares of Apache.

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