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Crude Oil Prices Soar, Activist Peltz Sets Sights on Disney

Bastiaan Slabbers / iStock Unreleased via Getty Images

Oil prices soared Monday morning following Saturday’s attack on Israel and Israel’s response. Crude prices were up 4% in early trading. Also, activist investor Nelson Peltz’s stake in the Walt Disney Co. (NYSE: DIS) threatens a new proxy fight.

Crude Oil Prices Jump

International benchmark Brent crude oil closed at $84.07 on Friday, the day before Hamas opened its attack on Israel. By Sunday night, ‌Brent rose to $89.00 a barrel, before pulling back to around $87.50 in early trading Monday. West Texas Intermediate (WTI), the U.S. benchmark, closed near $85.00 on Friday and reached a high of $87.00 late Sunday.

WTI reached a high of more than $90.00 a barrel last Tuesday before jitters over an economic slowdown due to rising bond prices sent the price of crude tumbling to Friday’s low. Neither Israel nor Palestine supplies any crude oil to global markets, but oil traders worry that two of the Middle East’s biggest suppliers, Saudi Arabia and Iran, will feel compelled either to cut production or impede transportation of crude.

Saudi Arabia, Israel and the United States have been negotiating a deal that would supply U.S. weapons and security guarantees to the Saudis in exchange for Saudi Arabia’s recognition of Israel and an end to crude oil production cuts. Iran, which has boosted production recently, has been linked to helping plan and supply the attacks on Israel.

Iran has denied any role in the attacks on Israel, but members of Hamas and Hezbollah have claimed that Iran has provided financing to them. Oil traders fear two outcomes: the United States will once again impose global sanctions on Iranian oil, leading to Iranian interference with the flow of crude oil through the Straits of Hormuz. Israeli officials have promised a strike against Iran’s rulers if the country is responsible for killing Israeli citizens.

Looming Proxy Fight at Disney

Activist investor Nelson Peltz has set up a second run at gaining board seats at Disney. Peltz’s Trian Fund Management launched an attempt to gain representation on Disney’s board last year. After Disney CEO Robert Iger fired 7,000 people and pledged other cost-cutting measures, Peltz withdrew.

After Peltz gave up the potential proxy fight in mid-March, Disney’s share price, which had dropped by 35% in the previous 12 months, has dropped another 10.4%. That appears to have been enough to get Peltz interested once again in pushing for seats on Disney’s board. The company has not paid a dividend since December 2019.

Trian has built a stake of more than $2.5 billion in Disney. That is an increase from around 6.4 million shares in June to more than 30 million shares. Peltz is now one of Disney’s largest shareholders, although his stake is far smaller than either Vanguard (about 149 million shares) or BlackRock (around 122 million shares).

It is no secret that Disney has been seeking a buyer for a stake in its linear TV properties. Disney settled a dispute with Charter Communications by offering Disney+ and ESPN+ streaming video programming to Charter’s customers. Allen Media has reportedly offered to purchase ABC for around $10 billion.

Peltz has not indicated whether either of these sales are on his list of things Disney would have to do to avoid a proxy fight. But don’t bet against it. Disney stock traded up by more than 1% in premarket trading on Monday, after gaining more than 2.5% on Friday.

There is little to no growth left in linear TV, and even ESPN is facing growth challenges. Tech giants like Apple, Amazon and Google have been mentioned as potential buyers of a stake in ESPN. Verizon, too, has discussed a direct-to-consumer deal that would combine the ESPN cable network with Disney’s ESPN+ streaming service.

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