• On paper, the narrative for Imperial Petroleum (IMPP) stock appears cynically positive.
• While crude oil is back in the spotlight, that’s also the problem.
• It might be good for a cautious bet for speculators.

Like the coronavirus pandemic, nobody in their right mind supported Russia’s dangerous decision to invade neighboring Ukraine — which apparently included some concerned Kremlin insiders. However, if the invasion was inevitable, you at least wanted your portfolio to be structured relevantly, which is where Imperial Petroleum (NASDAQ:IMPP) comes into the picture. Shortly after the invasion, IMPP stock shot up to $7.50 from $1.13.

Of course, that’s quite a massive lift — almost a 7X move within a matter of days. If you happen to be cynically minded, IMPP stock seems like a decent long-term wager despite its extraordinarily speculative profile. With U.S.-led sanctions hitting the Russian economy, along with Moscow delivering retaliatory measures, a good chunk of global hydrocarbons is indefinitely shelved.

While the above narrative sounds encouraging for IMPP stock, here’s the present reality. At time of writing, shares closed at $1.60 on the March 30 session, signifying the dangers of trading on geopolitical rumblings. You just never know what’s going to happen next nor can you perfectly predict mass human behaviors.

Still, the oil tanker specialist is mired in a complicated situation so your Imperial decision depends on your risk-reward profile.

Crude Oil Returns to the Limelight for IMPP Stock

Logically, the bullish case for IMPP stock stems from the sudden spike in energy prices. Check that — due to skyrocketing inflation, energy prices were already elevated prior to the eruption of violence in eastern Europe. It’s just that Moscow’s decision took hydrocarbon costs to bonkers levels.

Nevertheless, if you rode that wave that IMPP stock generated — and got out on or near the peak — you are sitting pretty now. The question is, can lightning strike twice?

At first, it seems implausible given the speculative nature of IMPP stock. As InvestorPlace contributor Ian Bezek stated, following Imperial’s formation as a spinoff from StealthGas (NASDAQ:GASS), IMPP “owned just three medium-range tankers and one Aframax oil tanker. For a publicly traded shipping company, that is a tiny fleet.”

However, Bezek noted, “Imperial intends to expand its fleet and can finance its purchases of ships by issuing new shares of IMPP stock to the public. The spinoff was probably carried out because the company wanted to acquire more tankers without diluting StealthGas’ stock.”

So long as the conflict in eastern Europe drags on, Imperial can eventually regain its mojo. Yes, I know there are hopes for productive peace talks but let’s be honest: Russian President Vladimir Putin isn’t someone who likes to lose face.

The Ukrainian resistance utterly humiliated Putin, so it’s more than possible that violence continues. This might cynically bolster IMPP stock.

Rising Desperation Could be the Next Headwind

Across the nation as drivers bitterly reconcile with pain at the pump, multiple media reports ran the inevitable headline: gasoline theft is on the rise. But this dynamic also made me wonder, could that leave companies like Imperial Petroleum at risk?

While we like to think that transporting oil from one place to another is simply a matter of finding a big ship — and plenty of it — the industry is much more complicated than that. Indeed, the oil transportation business is one of the riskier ways to make a living. And no, I’m not referring to the financial volatility though that’s a factor too.

Instead, I’m talking about piracy — yes, the “Arr!” kind. Except that these days, pirates are more known for the “rat-tat-tat” of their Kalashnikov rifles than anything else. And as high-profile incidents have shown, pirates can impose an asymmetrically devastating impact on the oil transportation sector and individual companies.

In fact, the unique downwind conditions associated with Covid-19 contributed to a spike in oil piracy. With the underlying market becoming so crucial and lucrative, it wouldn’t be surprising if pirates attacked more shipping lanes today.

If so, that could leave Imperial Petroleum vulnerable, especially considering that the company isn’t the biggest fleet operator in town.

Got (Loose) Change?

No matter how you cut it, oil transportation is a tough business. It faces multiple risks, including both financial threats along with kinetic ones in terms of piracy. These risks won’t disappear irrespective of what happens in Ukraine.

For that reason, I think investors should lean toward the cautious end of the scale, even though IMPP stock finds itself in a relevant position today because of geopolitics. But ultimately, your exposure to Imperial will depend on your tolerance for volatility.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.