- Global economy has not normalized post-war; oil prices may take 12 months to stabilize
- Brent Crude traded at $97.73 per barrel, rising 1.51% amid resilient Asian inventories
- UAE expected to increase oil production by millions of barrels, boosting supply
Julius Baer On Oil Prices: The global economy has not yet returned to normalcy following the war, and crude oil prices could take up to 12 months to fully normalise, according to Mark Matthews, Head of Research Asia at Julius Baer.
“I don't think the world has entered normalcy post war,” Matthews told NDTV Profit, adding that crude oil could take up to 12 months to normalise fully. However, he does not expect the war to persist for a very long time.
Last checked, Brent Crude was trading 1.51% higher at $97.73 a barrel.
Matthews also pointed to relatively resilient inventory levels across Asian markets, which he said are holding up despite the ongoing geopolitical uncertainty.
On the oil supply outlook, Matthews expects the UAE to raise production by a couple of million barrels, adding to supply in the market. Over the longer term, he expects crude oil prices to fall to levels around $60 a barrel.
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On monetary policy, Matthews said any potential rate hike by the US Federal Reserve would not be a hawkish one. He also pointed to the strength of economies such as the US and Japan as a supportive factor for markets.
Meanwhile, investors continue to pour major amounts of money into artificial intelligence, with Matthews saying investors are looking at Indian AI companies selectively.
In another interview last month, Matthews had said Asian markets were attracting more investor attention, although volatility remained elevated in parts of the region. Matthews had said the Korean market was highly volatile but that Korean stocks were fairly priced. He also expected Asian markets to attract greater investor attention going ahead.
On crude oil, Matthews had said he expected prices to decline towards $60 a barrel, noting that markets were already pricing in a fall in oil prices. He did not expect crude to rise to the $100-$150-a-barrel levels that investors were concerned about.
Matthews had also said he expected pressure on the Indian rupee to ease once crude prices decline, while improving domestic consumption, strong revenue growth and earnings growth were positive factors for India's macroeconomic outlook.
He had also expressed hope that the Middle East situation would normalise soon, with market cues from the Gulf expected to turn positive as the situation evolved.
ALSO READ: Crude Oil May Fall To $60 A Barrel; India To Benefit, Says Julius Baer's Mark Matthews
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