The landscape in Iraq is changing faster than ever these last few weeks. I’m still placing a lot of weight on the overall oil situation, which should not come as a surprise. HCL is about oil. Iraq’s wealth is backed by oil. Iraq’s history as a wealthy nation is OIL. Iraq still has… oil. It’s only the last decade or so that Iraq has not been a wealthy nation, and it’s my firm belief that they will return to that prosperity. They have been working their way back for some time now, and 15 years may seem like a long time to some, but let’s take a look at the bigger picture.
Imagine the history books, as written 100 years from now. “In 2003, the country of Iraq went backwards. Their currency (IQD) plummeted from 3X the value of the USD to mere pennies on the dollar. Their government and political system was in shambles and they were under extreme scrutiny from the outside world, the United Nations, and more. Despite these setbacks and challenges, the people of Iraq were determined to regain their former position in the world. With some deft political moves and shrewd business practices, Iraq revalued their currency in the year 2019. It was a move that shocked the markets but also stimulated the global economy… ”
When you look at the big picture, 15 years is a tiny window. It’s a blip in history, and if you zoom out far enough, you barely even notice it on the timeline. …Back to the current situation – it was only a couple weeks ago that we were talking about oil looking for $60 as a benchmark. We are hovering just above $50, but looking at the charts gives me a pretty nice feeling. …it stands to reason that we’re going to see a bit of ping-pong in the news. The Budget is one such ping pong item, with the following encouraging bit: There seems to be an agreement on what the Kurds will be getting, and it’s a bit higher than what they were arguing about a few years ago. The fact that Baghdad is raising the ante for the Kurds could easily be telling us that they are getting a little looser with their wallets. If they were headed for a LOP, would they do that? I don’t think so!