Transocean (RIG) Stock Follows Oil For The Top

Transocean LTD (NYSE: RIG) is running for the top, following other stocks in the energy sector up. The stock is currently trading on gains of more than 11%, lining up with stocks like CHK.

While RIG hasn’t issued any news of their own today, they don’t have to. By now, we all know about the attack on the Saudi Arabian oil facility. The attack has stocks across the energy sector trading well in the green. Here’s what’s happening:

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RIG Stock Climbs On Geopolitical Tensions

As with others in the industry, Transocean is flying. The gains come after a weekend attack on the largest oil facility in Saudi Arabia.

The facility is responsible for about 5% of the global production of oil on a daily basis, or 5 million barrels per day. Of course, taking this massive amount of oil out of the equation is going to send oil up, and it’s doing just that. At the moment, the commodity’s price has climbed by more than 10% and seems to be continuing upward.

So, what does this have to do with RIG stock? The truth of the matter is that Transocean is the world’s second largest offshore drilling contract. Should oil continue to climb, the company has the potential to see significant increases in revenue.

What We Know About The Attack So Far

So far, we know that a drone strike on the facility crippled Saudi Arabia’s oil production. In fact, the attack takes about half of the company’s daily production completely off of the table.

We also know that rebels in Yemen have claimed responsibility for the attack. However, the Trump Administration isn’t taking this confession at face value. In fact, the United States government suggests that the attacks actually came out of Iran. There are also stories circulating that suggest that parties in Iraq may be behind the attack.

We know that oil is climbing, and will likely continue to do so, sending RIG stock and others across the energy industry for the top.

Importantly, we know that the attack isn’t only increasing geopolitcal tensions in Saudi Arabia. The truth of the matter is that this attack is putting global geopolitical tentions for the top. Iran and the United States, already at odds, are going back and forth, about whether or not Iran is involved.

China is providing investment-based support to Iran as both of the countries are currenty at odds with the United States.

What Could Happen

The geopolitical issues in the Middle East are likely to continue to escalate. The attack on Saudi Arabia’s largest oil facility was done to financially cripple the country, and it may do just that.

As such, Saudi Arabia will be looking to its allies for assistance in finding out who waged the attack and going after these parties. Because Iran supports Yemen rebels, this could prove to be the beginning of the next major global war.

While the implications of the attack can be mighty concerning, they are also presenting investing opportunities. RIG isn’t the only stock climbing as geopolitical tensions grow worse. CHK, CEI, YUMA, ENPH and DNR are just a few stocks that roll off of the tongue when thinking about those that are seeing significant gains on this news.

At the end of the day, geopolitical tensions in regions responsible for tremendous amounts of global oil production are likely to continue sending oil and energy stocks for the top.

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