ConocoPhillips is buying a 42% stake in BP's Iraqi unit. The U.S. government thinks this will weaken Iran's energy hold. Iran controls Iraqi militias, Iraqi politicians, and Iraqi oil infrastructure. But sure, an American company swapping shares with another American company will fix that.
BP spent two decades getting threatened, bombed, and politically scapegoated in Iraq. Now they're selling to ConocoPhillips, who will spend the next two decades getting threatened, bombed, and politically scapegoated in Iraq. This is what passes for strategy.
The announcement comes Friday with billions in new investments. Billions of dollars flowing into a country where the government can't keep the lights on and militias blow up pipelines for fun. ConocoPhillips looked at BP's experience and said yeah, we want that. We want to own assets in a place where ownership means nothing and contracts are suggestions.
Retail traders will see Iraq and think opportunity. They'll buy energy ETFs. They'll Google "how to invest in Middle East oil." They'll end up with a Schwab account full of leveraged crude futures they don't understand. Six months later they'll be posting on Reddit about how the market is rigged because Brent crude didn't care about their technical analysis.
The U.S. seeks to weaken Iran's energy hold. Iran has spent forty years building proxy networks, bribing officials, and arming militias. ConocoPhillips has a PowerPoint and a wire transfer. The proxy networks will still be there Monday morning. The PowerPoint will not save you.
BP gets out. ConocoPhillips gets in. Iran keeps doing exactly what it was doing. And somewhere in Houston, an analyst is updating his model to show how this 42% stake will unlock shareholder value in a country where the last guy who unlocked value got kidnapped.
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