Assessment of Two Investment Funds: 'Oil at $150' Amid Iran Sanctions

Given the trade tensions and increased crude oil production that exceeds current demand, the global oil market does not have a bright future. However, some of the most important investment funds in the energy sector believe that oil prices will reach historical highs again. Reuters reported that the trade war between the U.S. and China threatens global economic growth. In physical markets, signs of reduced production can be observed, and oil shipments are being stored in tankers without buyers, leading to a decrease in prices. Additionally, the average interest rates worldwide and the value of the dollar are rising. Under the influence of these factors, the price of imported crude oil for buyers in developing countries is increasing. Both OPEC and the International Energy Agency warned in their latest monthly forecasts that trade disputes threaten global demand growth. Nevertheless, some major investment funds like 'Andurand Capital' and 'Westbeck Capital' predict that the price of oil per barrel will rise from the current price of about $75 to $150. The main factor for this price increase is expected to be U.S. sanctions against Iran's energy sector, which will be implemented from November. One of the managers at Westbeck Capital, headquartered in London, stated: 'We believe that by mid-November, about 1.3 to 1.4 million barrels less oil will be supplied to the market daily. This is a significant figure. This is based on the view that the U.S. may temporarily grant exceptions in these sanctions. Ultimately, the reduction in Iran's oil exports may reach two million barrels per day.' Following the U.S. withdrawal from the JCPOA on May 8, the country announced it would resume nuclear sanctions against Iran. Additionally, Donald Trump holds OPEC responsible for a 45% increase in oil prices over the past year. Reuters adds that Pierre Andurand, the manager and owner of Andurand Capital, who predicted the sharp increase and fall in oil prices in 2008, reacted to Trump's statements on Twitter, writing that OPEC's spare production capacity is at its lowest. He added: 'This will be a big problem' and predicted that oil prices will reach $150 within two years. Aside from the risk of a significant reduction in Iran's oil exports, crude oil production in Venezuela may drop below one million barrels per day by the end of this year due to the country's economic crisis, down from about two million barrels in mid-2017. Andurand Capital declined to comment on this matter. Adopting a policy contrary to the current market environment could be costly. Even Andurand, who predicted a sharp increase in oil prices in 2017, saw prices remain around $50 in reality. According to investment documents obtained by Reuters, Westbeck Capital's energy sector revenue increased by about four percent last year, and according to statistics published by HSBC, Andurand Capital's revenue also increased by about 12 percent in the first half of 2018. One of the managers at Westbeck Capital stated: 'If our prediction about the increase in oil prices from $75 to $150 over the next 12 to 18 months is correct, our income from buying oil now and selling it in the future will be excellent. Of course, if our prediction is correct.'