Seadrill Ltd (NYSE: SDRL) is having an overwhelmingly strong day in the market today. However, if you dig through their feed on Yahoo! Finance, you’ll see that no new news has been released by the company. So, what’s the deal? Why is it that the stock is headed for the top? Today, we’ll talk about:
- Why SDRL is flying;
- what we’re seeing from the stock; and
- what we’ll be watching for ahead.
Why SDRL Is Up
As mentioned above, Seadrill is having an incredibly strong start to the trading session this morning. However, there has been no news released by the company. So, what’s the deal? Well, the gains are ultimately the result of geopolitical tension between the United States and Iran. You see, sanctions were lifted on Iran quite a while ago due to a nuclear pact. However, President Trump is pushing Iran to maintain its agreement and meet deadlines, announcing that he will reimpose sanctions if deadlines are missed. Well, today just so happens to be the last day for Iran to act and nothing has happened just yet.
So, what does this have to do with SDRL? Well, the company is in the oil and gas sector. Therefore, it is highly susceptible to price movements in oil. Iran is one of the largest oil producers in the world, actually holding the spot as the third largest producer in OPEC. If sanctions are placed back on Iran, the oil from the country would be cut off from much of the developed world, leading to lower supplies. As the law of supply and demand tells us, this will lead to gains in the price of oil. Because oil is where SDRL makes its money, these gains could have a profoundly positive effect on the company’s financial results.
What We’re Seeing From The Stock
As investors, one of the first lessons that we learn is that the news moves the market. In this particular case, the news is overwhelmingly positive for Seadrill. After all, if the US does impose sanctions on Iran again, it would mean that the company will likely profit more from its continued operations. So, it’s no surprise to see that excited investors are sending the stock toward the top today. Of course, our partners at Trade Ideas were the first to alert us to the gains. At the moment (11:04), SDRL is trading at $0.32 per share after a gain of $0.037 per share (13.39%) thus far today.
Stop wasting your time! Start finding winning trades in minutes with Trade Ideas!
What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on SDRL. In particular, we’re interested in following the story surrounding the potential sanctions on Iran. After all, if this does happen, the stock could fly. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
Never Miss The News Again
Do you want real-time, actionable news delivered to your inbox? Join the CNA Finance mailing list below!