Amrita Sen, Barclays Capital has expressed his free and frank opinion on the geo political crisis prevailing in the world market and has given his views on the likely crude price due to prevailing Iran crisis post sanctions imposed by U.S
I think geo-political tensions have clearly been one of the key drivers for prices to have risen so sharply at the start of the year. Our base case forecast is still for an average of USD 110 per barrel for Brent. However, I think clearly the upside risk to that is very large, given how Iran’s situation is evolving at the moment. It is not just Iran. There’s plenty going on with respect to Nigeria, Kazakhstan. But Iran is the biggest focus. If there are some irrational decisions taken on that front whether by the US or by Iran itself, I wouldn’t even dare to put a ceiling to the price. Prices would spike. On our judgment, the Strait of Hormuz should still remain open because the US has its fifth fleet in Bahrain positioned for an event like this. Also, it’s not in Iran’s best interest to close the strait either. So, in that kind of a situation, prices will remain very well supported around these levels, but we shouldn’t see a spike. With the constant amount of sanctions coming through against Iran, you can’t rule out something irrational. If that happens, prices can spike.
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