Could we see US$300 a barrel oil prices in the not too distant future?
According to Pierre Andurand, a prominent hedge fund manager, US$300 a barrel in coming years is “not impossible” given the reluctance of energy companies to invest in new production. Mr. Andurand said in a series of recent Tweets that concerns about the impact of electric vehicles on future demand was limiting investment in projects with long lead times and that will continue to push prices higher as supplies tighten.
“So paradoxically these peak demand fears might bring the largest supply shock ever,” he wrote. “If oil prices do not rise fast enough, US$300 oil in a few years is not impossible.”
Mr. Andurand, who runs oil-focused Andurand Capital Management LLP, also went against the conventional view that triple-digit oil prices will dampen demand growth.
“So no, US$100 oil will not kill the economy,” he wrote on Twitter. “And we need +US$100 oil to encourage enough investments outside of the U.S.”
His comments on demand echo those of Saudi Oil Minister Khalid Al-Falih, who earlier this month suggested that prices could rise further from their current level close to US$75 a barrel without doing economic damage around the world.
Mr. Andurand was among top commodity hedge fund managers who met with Minister Al-Falih last summer in London to discuss the state of the oil market. The Organization of Petroleum Exporting Countries (OPEC) and its partners plan to maintain their production cuts this year, which have helped to boost oil prices.
