Nomi Prins — MARCH ISSUE - The New Oil Risk Premium - and the Compelling High Dividend Producer Outside the War Zone
The Iran war reset the global oil risk premium regardless of where prices settle. Rather than chase costly large-caps, the March Pulse Premium pick is a ~16%-yield Latin-American heavy-crude producer outside the war zone: Ecopetrol.
One-line take: the full March Pulse Premium issue. The Iran war (started Feb 28) reset the risk premium on where to source oil — a repricing that won't reverse when the Strait reopens, because governments have re-learned the cost of single-corridor reliance. Brent has held $90-110; the SPR sits at ~243M barrels (lowest since the early 1980s) and must be rebought as Western-Hemisphere heavy crude for years. The pick: Ecopetrol (EC) — Colombia's 88%-state-owned integrated oil giant, ~745k boe/d of heavy crude shipped directly to Gulf Coast refiners built for its grade, lifting costs <$12/bbl, ~16% dividend yield, trading ~$15 at ~12.6× earnings (vs CVX ~31×, COP ~20×). Key risk: political (anti-oil President Petro + a charged CEO), but Petro's term ends Aug 2026 (election May 31), a potential re-rating catalyst. Action: buy EC up to $18.00.
1. Stocks & names mentioned
Prins's rated March pick is Ecopetrol (EC, Positive, buy up to $18); Chevron and ConocoPhillips are cited as the overpriced "obvious trades." The "At" link opens the article. Research: QT Qualtrim · SA Seeking Alpha · STK Stock Analysis.
| Ticker | Name | Research | View | What she said | At |
|---|
| EC | Ecopetrol S.A. | QT · SA · STK · FA | Positive | The March pick — Colombia's state-controlled oil giant (~745k boe/d heavy crude shipped to Gulf Coast refiners built for its grade), lifting costs <$12/bbl, ~16% dividend yield, ~$15 at ~12.6× earnings. A structural SPR-refill supplier outside the Mideast. Buy up to $18.00; conservative $18-20 target = 20-34% upside. | read |
| CVX | Chevron | QT · SA · STK · FA | Negative | Up ~20% since the war began, near all-time highs at ~31× earnings — the "obvious trade at the top of the obvious time," with Mideast exposure and refinery complexity adding risk to the upside. | read |
| COP | ConocoPhillips | QT · SA · STK · FA | Negative | Up ~15% since the war began, near all-time highs at ~20× earnings — another late, elevated "obvious trade" she'd avoid in favor of cheaper, higher-yielding EC. | read |
| Crude oil | Crude oil (heavy/sour — commodity) | — | Positive | Brent $90-110 since the war; the SPR must be rebought as Western-Hemisphere heavy crude for years — a structural procurement tailwind for outside-the-Mideast producers regardless of when the Strait reopens. | read |
The full March Pulse Premium issue — EC is the rated pick. "View" reflects framing (EC = the recommended discounted/high-yield play; CVX/COP = overpriced obvious trades), not standalone price ratings.
2. Key points
The war reset the oil risk premium
- Since Iran closed the Strait of Hormuz, insurers pulled war-risk coverage and only limited Yuan-paid tanker movement resumed. The IEA's 400M-barrel release is a political response, not a market fix — it covers only ~20 days of normal Strait flow. The lasting effect is a higher risk premium on Mideast-sourced oil that holds even if oil slips below $100.
The strategic reserve gap
- The SPR (714M-barrel capacity) sits at ~415M, drawn down >180M during 2022-23; only 68M was added over three years. Trump's 172M release (over 120 days) takes it to ~243M, the lowest since the early 1980s. Wright's 200M-in-a-year refill pledge is unrealistic — at the prior pace, rebuilding to pre-crisis levels would take over a decade.
The Western-Hemisphere barrel commands a premium
- Gulf Coast refiners (55% of US capacity) were built for heavy Venezuelan/Mexican grades. Colombia exports ~745k bpd (US its primary buyer); Venezuela's ~800k bpd of heavy crude became newly accessible after Maduro's removal; Mexico cut US exports to feed its own refineries. Producers outside chokepoints, with US infrastructure ties and scale, are structurally more valuable — and the market hasn't caught up.
Ecopetrol — built for this moment
- Colombia's largest integrated energy company (operating since 1951; 88% government-owned), ~745k boe/d from Eastern Plains heavy-crude fields (Castilla, Chichimene, Rubiales). Its Cenit pipeline moved >1.1M bpd in 2025 to Caribbean terminals and on to the Gulf Coast. Castilla Blend and Vasconia fit Gulf Coast refineries almost perfectly — a refinery-configuration advantage. It just chartered a dedicated Aframax (Atlantic Majesty) for ~1M barrels/month of direct US Gulf Coast export.
The numbers
- 2025 net income fell ~40% to ~$2.2B on a ~$68 Brent average — but lifting costs <$12/bbl, production flat at 745k bpd, best crude differential to Brent in four years ($4.60), 121% reserves replacement, gross debt/EBITDA 2.3x (1.6x ex-ISA). Each $1 Brent move ≈ $207M EBITDA / $161M net income — leverage now working for shareholders at $90-110 Brent.
The dividend
- ~16% yield (paid twice a year), tied to net income (40-60% payout of distributable profit). The 2025 payout was set at $68 Brent — if prices hold near current levels, next year's dividend should be meaningfully higher. Caveat: paid in Colombian pesos and converted to USD for ADR holders, so there's currency variability.
What could go wrong
- Political: President Petro has banned fracking, halted exploration licenses and hiked windfall taxes; his appointee CEO Ricardo Roa faces corruption charges (board took no action Mar 24). Plus production decline (output trending lower since 2013, ban-constrained reserves), oil-price downside, and peso/USD currency risk.
Drivers ahead
- Petro's term ends Aug 2026 (election May 31) — his exit removes a four-year governance overhang and could lift the exploration ban, a re-rating catalyst. Plus the SPR procurement program; full ownership of the CPO-09 block (bought out Repsol's 45% stake; >2B barrels believed, infrastructure next door); and the Sirius offshore gas discovery (100% pre-sold) as free optionality.
Price & upside / action
- EC ~+48% over the past year but still only ~$15 — down ~25% from 2022's ~$20, barely +14% over five years. A return to $18-20 = 20-34% upside (below 2022 highs), with the ~16% yield in hand meanwhile. Action: consider buying EC up to $18.00.
3. In plain English
A jargon-free summary of why each name is in the piece. (Plain-language companion to the table above; renders on each name's consolidated page.)
EC — Ecopetrol S.A. Positive
Ecopetrol is Colombia's national oil company. Prins likes it because it pumps the exact kind of thick "heavy" crude that US Gulf Coast refineries were built to process — and the US, having just drained its emergency oil reserve, is going to be a big buyer of that crude for years. So there's a built-in customer for what Ecopetrol sells.
On top of that, the stock is cheap (about 12-13 times earnings versus 31 for Chevron) and pays a roughly 16% dividend — meaning if you own the shares you collect around 16% of your investment in cash each year, more than double a 10-year Treasury. Its production costs are very low (under $12 a barrel), so it makes money even when oil is cheap. The big catch is politics: Colombia's current president is hostile to oil and there's a scandal around the CEO — but he's term-limited out in August 2026, which Prins thinks could lift the cloud over the stock. Her recommendation is to buy up to $18 a share (it's around $15).
CVX — Chevron Negative
Chevron is the crowd's go-to "buy oil during a war" stock, and Prins is warning against it. It's already jumped ~20% since the war started, sits near record highs, is expensive (about 31× earnings), and is directly exposed to the Middle East. You'd be paying a premium after the easy money has been made — the opposite of getting in early.
COP — ConocoPhillips Negative
Same story as Chevron — ConocoPhillips is up ~15% since the war began and trades near all-time highs at about 20× earnings. Prins groups it with the "obvious trades at the top of the obvious time" and would rather own cheaper, higher-yielding Ecopetrol instead.
Crude — Crude oil (heavy/sour) Positive
The US drained a big chunk of its emergency oil stockpile and has to buy it all back over many years — specifically the heavy, high-sulfur grade its Gulf Coast refineries are built to run. That creates a steady, structural buyer for one particular kind of oil from a small set of nearby producers, which is the whole reason Ecopetrol is so well placed.
Summary derived from the Prinsights Substack March Pulse Premium issue for personal study. Not investment advice. © Nomi Prins / Prinsights for source material.