A World Turned Upside Down

See Spot jump. See oil run. Watch Vladimir flex.

The world, my Foolish friends, is just about halfway upside down. And that disorientation is one of the key reasons why crude prices have climbed from just above $50 in January to their current perch near $88.

Take this still-uncompleted week, for instance. We've moved from rumors of an Iranian assassination plot against Russia's Vladimir Putin, to threats of a Turkish invasion of Iraq, to warnings to the U.S. from the aforementioned Mr. Putin against the use of the former Soviet republic as a staging area for an invasion of the aforementioned Iran.

Before we attempt to sort out the implications of this turmoil, I'll reiterate my contention that the world of energy will only become more convoluted in the years ahead. Partly for that reason, I believe that Fools should make doubly certain that energy companies are well represented in their portfolios.

I continue to lean toward the big oilfield service companies, such as Schlumberger (NYSE: SLB  ) , Halliburton (NYSE: HAL  ) , or Baker Hughes (NYSE: BHI  ) , or perhaps deepwater drillers Transocean (NYSE: RIG  ) and Diamond Offshore (NYSE: DO  ) . I'm also inclined to depend upon ExxonMobil (NYSE: XOM  ) as a proxy for the big producers.

But let's look for a minute at the world's daunting -- and energy-related -- events this week:

  • As for a Persian plot to bump off Putin, my only response is: Why? Russia, with some help from China, remains Iran's primary protector in the world community. Indeed, despite interruptions, the Russians are building Iran's first nuclear power plant.
  • The Turks clearly have two burrs under their saddle. The first is their long-standing antipathy for the Kurds, who populate a portion of their country and much of northern Iraq. The second is an ill-timed vote last week by a U.S. congressional committee that condemned Turkey for the killing of Armenians by Ottoman Turks way back in World War I.
  • And then there's Putin's muscle-flexing regarding the potential for a U.S. invasion of Iran. This exercise will make the United States consider more carefully any incursions it might make against Mahmoud Ahmadinejad and his wacky regime, a group that continues to exacerbate events across the border in Iraq.

With the abovementioned events fueling the fire, the price of oil has risen roughly 10% in just the past week, as part of its levitation throughout 2007. I urge Fools to stay tuned for further developments, and to structure their portfolios accordingly.

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