Go Your Own Way: Icahn, Buffett, America, Europe Staking Out Oil Positions

Of all the economic chaos in the wake of Russia’s unprovoked attack on Ukraine, nothing’s moved markets like oil. That’s unsurprising, Russian exports account for 8% of the global oil supply.

It has, however, led to some surprising moves by major economic players.

Buffett Puts His Chips In Occidental, Icahn Looking for Another Poker Table

You don’t often see the strategy of two investors this famous coming into direct conflict under such urgent circumstances, but Warren Buffet and Carl Icahn have been here before. Buffett’s Berkshire Hathaway bought $3.1 billion in shares of Occidental Petroleum last week, upping its stake in the company to $5 billion. Occidental has seen its stock double this year and, with crude oil trading well above $100 a barrel, Buffett’s betting the company will keep riding the price surge. Icahn, meanwhile, sold the last of what was once a 10% stake in Occidental. The last time this happened is when Icahn exited Apple in 2016 and let’s just say Buffet made the right call.

Alternative Nation: European Union ministers discussed Monday the possibility of banning Russian oil imports, but several nations said no, owing to oil’s “essential importance” for heating, transport, electricity, and industry. Holding the line didn’t help much, as gas prices in Europe still rose 79% to a record €345 a megawatt-hour on Monday. The US is also considering a ban, engaging several countries in new trade talks. But the alternatives to Russia are also lacking in the human rights department. According to The Wall Street Journal, US diplomats have reached out to the Venezuelan regime, which America has accused of widespread human rights abuses, offering to ease oil sanctions. According to Axios, the US is also considering approaching Saudi Arabia about increasing oil production, despite the nation having been accused of killing innocent civilians in the Yemeni civil war and, according to the CIA, assassinated Washington Post columnist Jamal Khashoggi.

GDP Quicksand: So would could all this mean for the average Joe? Analysts at Barclays warned Monday that stagflation — the dreaded scenario when the cost of things keeps rising but the economy doesn’t grow — is now much more likely. And Goldman Sachs analysts said that a sustained $20 shock in oil prices would shave 0.6% off of GDP growth in Europe this year and 0.3% in the US and China.