When Syria uses chemical warfare or Iran threatens to launch missiles, it puts the collective world on edge, pushes stock markets over the edge and launches oil prices off the charts. The mere mention of Middle East mayhem has been known to spur investors to sell and seek shelter from a potential storm of profit-taking.
Unrest in oil-rich parts of the world has been a part of history seemingly forever. Although Syria, the latest Middle Eastern country on the global radar, accounts for just 0.5% (half a million barrels per day) of world production, it’s the domino effect that has investors on pins and needles.
Syria’s allegiance with Iran, a potential civil war in Iraq, and continuous tension in Egypt–home to the oil-transporting Suez Canal — puts about 3.5 million barrels a day at risk. Any escalation could trigger economic sanctions, sending the price of oil back to the $150 mark or more.
But you don’t need to let it wreak havoc on your portfolio.
Why not grab the oil bull by the horns and invest in stocks with nothing at stake should someone stick a cork in the Suez Canal, and everything to gain from panic-driven oil prices? Let’s look at a couple of oil companies that stand to profit amid either peace or war in the Middle East — and deliver hefty dividends to boot.
For our first gem, we look to Canada. A Canadian energy trust operating as a real estate investment trust (REIT), Enerplus Corp (USA) (NYSE:ERF) is the largest conventional oil and natural gas income fund in North America. The Calgary-based company typically invests in mature properties located in Western Canada — far from any upheaval in the Middle East.
Here’s something you may not know: Our Northern friends are one of the top oil exporters to the United States; Mexico and Venezuela are the others. It’s a misconception that the U.S. imports most of its oil from the Middle East. Last year, an average of 2.8 million barrels per day came from Canada, double what the U.S. imported from Saudi Arabia last year.
There is little doubt that Enerplus Corp (USA) (NYSE:ERF) has benefited from the recent increases in energy prices. The price of oil hit a year-to-date low of $97 per barrel on April 17 and increased 10% to $107 per barrel in September. Since mid-April, shares of Enerplus Corp (USA) (NYSE:ERF) have shot up 31%.