President Donald Trump's aim to reduce energy costs for Americans may be stumbling upon a new obstacle as Saudi Arabia has been slashing oil exports to the United States since September. Continuing with the trend that started two months ago, the desert kingdom is putting even fewer barrels aboard oil tankers to the United States in a bid to drive oil prices up.
Oil Prices Likely to Surge
Saudi Arabia's November decline in the number of barrels shipped to the United States comes after a six-week oil market drop that pushed oil into a bear market.
Oil prices rose about 1% on Nov 19 amid prospects of Saudi Arabia pushing Organization of the Petroleum Exporting Countries (OPEC) along with Russia curbing supplies in an oversupplied global market toward the end of this year.
December Brent crude oil futures rose 1% from its previous close to reach $67.41 per barrel at 07:46 GMT on Nov 19 and West Texas Intermediate increased 1.4% to reach $57.22 a barrel.
Per a CNBC report, Saudi Arabia had slashed crude oil supplies to the United States last year as well in order to ramp up oil prices by curbing global saturation and decreasing output along with other OPEC member nations and Russia.
"It worked so well in 2017 for [Saudi Arabia] to cut flows to the U.S. because people could see the inventories dropping because U.S. data is so timely and transparent," Matt Smith, Energy data provider Clipper Data's head of commodities research, said.
Less supply could lead to a drop in U.S. stockpile inventories, hence pushing oil prices up. The OPEC, led by Saudi Arabia, is planning to cut 1-1.4 million barrels per day of global supply to stabilize the declining-demand, oversupplied-market scenario.
Alexander Novak, Russia's energy minister, said on Nov 19 that the country was planning to sign a partnership agreement with OPEC, details of which would likely be discussed at an OPEC summit in Vienna on Dec 6.
Given the likeliness of OPEC and Russia cutting crude oil supplies, a rise in oil prices is a possibility in the near future.
Industries That Could Benefit From Potential Rise in Oil Price
Increasing oil prices may not be favorable for many consumers and companies, but there are some industries whose business models allow them to profit from it. Saudi Arabia's decision to cut crude oil shipments could prove beneficial for these industries, which could offer good investment opportunities to investors.
Rising oil prices often have a positive effect on alternative energy and oil substitute companies, as consumers turn to biofuels, coal and natural gas to compensate for energy. Coal companies such as Peabody Energy Corporation BTU and Cloud Peak Energy Inc CLD frequently benefit from higher oil prices.
Green technology companies such as solar module manufacturer First Solar, Inc. FSLR could gain too. Other green technology businesses that might benefit include hydrogen production units, solar and wind energy farms.
Hybrid vehicle manufacturers also profit from rising oil prices. Auto companies such as General Motors Company GM and Ford Motor Company F also manufacture hybrid vehicles along with oil-dependent ones to compensate for losses from higher costs of oil. Auto giants such as Tesla, Inc. TSLA predominantly manufacture electric cars and hybrid vehicles and thus need not worry about an increase in oil prices.
Other industries that could benefit at present from high oil prices by virtue of the nature of their operations are industrial gas and waste management businesses.
You can see the complete list of today's Zacks #1 Rank stocks here .
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free reportGeneral Motors Company (GM): Free Stock Analysis ReportFord Motor Company (F): Free Stock Analysis ReportTesla, Inc. (TSLA): Free Stock Analysis ReportPeabody Energy Corporation (BTU): Free Stock Analysis ReportCloud Peak Energy Inc (CLD): Free Stock Analysis ReportFirst Solar, Inc. (FSLR): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research