Oil is bullish, and there’s no sign that it is slowing down. Thanks to Donald Trump, the crude oil would only go north. The U.S. president wants to “Make America Great Again”. He also wants China to fix US$347 billion trade deficit that the U.S. is suffering, creating a trade war in the process. He had launched missile strikes – twice – against Syria.

 

After picking a fight with North Korea, Trump administration appears to be moving to its second target – Iran. Like it or not, Trump is one of the factors that the global oil skyrockets. The recent spike in crude oil prices were blamed largely on Saudi Arabia and its cartel OPEC together with Russia. Trump conveniently slammed OPEC for the artificial high price.

 

Saudi reportedly seeking US$80, even US$100 a barrel, for crude oil so that the kingdom’s oil company Aramco could get the highest valuation in its share sale, IPO (initial public offering). Hence, the OPEC (Organization of Petroleum Exporting Countries) and its partners are expected to maintain their 1.8-million barrels a day production cuts this year.

However, Saudi, and Russia for that matter, could see an unexpected windfall if the prediction by this hedge fund manager comes true. Pierre Andurand, a French businessman specialising in the oil market said that within a few years, the crude oil might pop to US$300 a barrel. His justification – reluctance of energy companies to invest in new production.

 

Mr. Andurand, whose name was listed in the top 20 highest-earning hedge-fund managers by Forbes Magazine in 2008, thinks that part of the reasons why oil companies are thinking twice about investing in new production is due to fears of the impact of electric vehicles on the demand for oil. Therefore, he thinks that US$300 oil in a few years is not impossible.

 

Surprisingly, Pierre Andurand, who runs oil-focused Andurand Capital Management LLP, also went against the conventional view that triple-digit oil prices will dampen demand growth. He claimed that oil above US$100 will not kill the economy. In fact, oil above US$100 will encourage investments outside of the U.S.

Coincidently, Andurand was among top commodity hedge fund managers who met with Saudi Oil Minister Khalid Al-Falih in July in London to discuss the state of the oil market. Like Mr. Andurand, Al-Falih also suggested that prices could rise further from their current level close to US$75 a barrel without doing economic damage.

 

The Saudi Arabia oil minister said the global economy has the ability to absorb costlier crude. However, it is worth to note that when the crude hit the US$150 a barrel in 2008, the commodity market crashed. Pierre Andurand’s comments on the bullish oil prices, strangely, were removed from his Twitter account. It’s unclear if he has actually placed his bets before trying to drive up the price.

 

Back in September 2015, Andurand correctly forecasted that crude would slump to between US$25 and US$30. Five months later, his prediction hit the bull’s eye. In August 2017, he told the Financial Times that US$100 oil was a distinct possibility. But he had also lost tons of money. In May 2011, his US$2.4 billion funds lost 20% or US$500 million betting wrongly in the oil market.

With Trump and his allies such as Israel eagerly to start a new war in the Middle East, it isn’t hard to predict that oil can only go north. The date to watch is May 12 – the deadline when President Donald Trump must decide whether to continue waiving sanctions against Iran. If Trump refuses to, he is expected to scrap Obama’s deal and restore sanctions on Iran, OPEC’s third largest oil producer.

 

In spite of exaggerated stroking, hugging and kissing, it appears that French President Emmanuel Macron has failed to convince Trump not to withdraw from the nuclear deal entirely. And after Israel’s Prime Minister Benjamin Netanyahu revealed files he claims prove Iran ran a secret program to produce nuclear weapons, the prospect of a new crisis in the region has gone up a few notches.

 

Trump’s new sanctions against Iran, if imposed could remove up to 800,000 barrels per day from global oil markets. Essentially, this would tighten global oil supplies. As demand and consumption increase, this will result in even higher prices. What the crude oil needs is retaliation from Iran and Russia after Israel attacked Syria with missiles on Sunday, killing 16 people, many of them Iranians.

 

Other Articles That May Interest You …

• Saudi’s Dream For $100 Oil In Jeopardy As Trump Warns OPEC About Fake High Price
• Oil Skyrockets To 3-Year High – 32 Million Malaysians Will Experience The Biggest Shock In Their Life After Election
• Thanks To Trump, Oil May Spike To $100 – That’s Precisely What Putin Wants
• Oil Crashes!!! U.S. Produces So Much Oil That They Even Sell To The Arabs
• U.S. Oil On Its Way To Beat Saudi & Russia – Tops 10 Million Barrels / Day Since 1970
• Everyone Knows Oil Supply Will Be Up In 2018, But Nobody Knows By How Much
• If Oil Goes Above $70, The Complacent & Lazy Saudi Might Not Reform At All
• Here’s How Oil Could Crash To $10 – In 6 To 8 Years
• Meet United States – The World’s Latest Oil Exporter – After 40 Years

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May 1st, 2018 by financetwitter

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