Vladimir Putin Takes Bombing Iran Off the Table!
Russia Arms Iran with Sophisticated Defensive Missiles.
This could add to the Middle East War …
and add Terror Premium to the World Price of Oil.
The message just came from the Kremlin.
There is “no longer need for this kind of embargo.”
But Russian Foreign Minister Sergey Lavrov wasn’t referring to the international sanctions against his country.
Rather, he was referring to the fact that Russia now plans to sell advanced S-300 surface-to-air missiles to Iran.
This move came with President Vladimir Putin’s personal stamp of approval.
This is a watershed event for many reasons.
Putin has decided to undermine the Iranian embargo that has been in place since 2010. This embargo has prevented, among other things, sophisticated weapons purchases.
But he doesn’t care about helping his friends. He’s doing this to advance his own agenda.
For investors who are paying attention, he might have inadvertently found a way to help them, too
Putin Crosses a Red Line
Although Putin has said that the S-300 missile in Iran is “no threat to Israel,” there’s little other way to interpret this move.
That’s because Israel has regarded the S-300 — an advanced Russian air defense and anti-ship missile system — as an absolute “red line.”
And it isn’t buying the Kremlin’s explanation that this was purely a move to provide a “defensive” weapon to Iran.
Israel Prime Minister Benjamin Netanyahu asserts that his country will do what it can to disrupt Iran’s nuclear weapons program. This includes bombing and destroying its nuclear facilities.
In recent months, Netanyahu has qualified this threat. He has suggested that Israel will only attack Iran if the regime’s nuclear program poses a direct and imminent threat.
That is, if the “sword is at the throat.”
Sword, Meet Throat?
Currently, Iran has weak air defenses and would not be able to do much to stop a coordinated airstrike.
These new S-300 missiles could, however, change the outcome of a potential military attack against Iran.
Putin might try to sound concerned about Iran not being able to properly defend itself.
But the timing is uncanny.
It’s a Profit Opportunity!
By agreeing to sell the S-300 missile system to Iran …
Putin might actually be setting up his allies there for a world of hurt in two big ways.
First, Putin is essentially setting a deadline for Israel to launch an attack.
The attack, should it come, could destroy Iran’s nuclear infrastructure and even its weapons program.
Second, this move seems designed to sabotage Iran’s nuclear negotiations with the U.S. and five other world powers.
This is happening right when the “framework” for a comprehensive deal to end Iran’s isolation can come together.
After all, a well-armed Iran changes the arms embargo game.
Either Way, Russia Can Benefit
In short, Putin has dramatically reduced the leverage that brought the Iranians to the table — and, as such, may encourage Iran to walk away from negotiations.
Putin has also turned the question of an Israeli war against Iran from being strictly theoretical into a reality.
It’s a reality that world leaders may have to face immediately … especially if those missiles are delivered without Iran agreeing to a final nuclear deal in June.
Putin knows full well that he is triggering an Israeli countdown … which he has been happy to do in the past.
From Putin’s point of view, selling missiles to Iran makes sense.
After all, it’s a good way to lash out against the sanctions put in place since Russia’s annexation of Crimea.
At the same time, Putin couldn’t care less whether Iran actually uses the S-300 missile systems he is selling them.
All he cares about is that Iran’s money is good and its regime remains dependent on Russian protection.
(Interestingly, even Greece allegedly wants the same missiles that Russia is selling to Iran.)
Putin also has to be thrilled about adding anxiety to the widespread Middle East conflict.
This kind of tension can only serve to add to the price of oil.
If past conflicts are any indication, as much as a $20 terror premium could appear.
Guess Who Benefits?
That’s right, our pal Putin.
Putin and Russia desperately need a bounce-back in the price of oil.
Oil has been clawing its way higher in recent weeks thanks to the widening proxy war between Saudi Arabia and Iran.
Investors can benefit, too.
That’s because the effect this is having on some of my favorite plays in the oil patch has been rather substantial.
Let’s take a moment and consider two of my favorite oil stocks, Anadarko Petroleum (APC) and Apache Corp. (APA).
Five out of six sentiment indicators that I watch say APC is looking like a buy.
We’ve been playing this name in my Global Resource Hunter newsletter for the last couple of years. Most recently, I recommended adding shares at $82.50.
The stock is currently trading at $92, after pulling back from $94 in Friday’s trading.
Anadarko is the largest remaining international independent oil and gas explorer/producer in the world.
But I don’t think it will stay independent for long. This company could very well be ripe for takeover by an oil giant like ExxonMobil (XOM), Royal Dutch Shell (RDS.A) or other company that knows a value when it sees one.
APC may well be worth as much as $130 a share in a takeover or merger.
Even if that doesn’t happen, APC could still reach that price. That’s because our Alpha Scorecard has an upper target of $130 — more than 40% higher from here!
The Alpha Scorecard is a tool that examines a company’s future free cash flow to determine the value or, more accurately, a target price for a particular stock.
It arrives at these targets by zeroing in on a company’s earnings, rating the quality of its balance sheet and determining its cost of capital.
It’s a similar story for Apache, with five out of six of my sentiment indicators suggesting it’s time to buy.
The Scorecard sees some nice potential upside here, too.
The Scorecard suggests Apache could gain more than 50% from current levels, to soar from its current $70 price to well-above $100.
In a best-case scenario, it could soar up to $128.95 — almost 90% higher.
Is it doable? It’s certainly possible. And I think it’s worth considering to add stocks like APC and APA to potentially benefit.
Always Looking Out for Your Chickens,
P.S. For full disclosure, APC and APA are active recommendations in my Global Resource Hunter newsletter. For more information, you can click here.
With contributions from Geoff Garbacz, Phil Erlanger and Dawn Pennington