There is a high probability of oil hitting USD 125-USD 150 per barrel in the second half of 2022, said Arvind Sanger, managing partner of Geosphere Capital Management, on Friday, adding that pressure will continue on fuel prices in India.
In an interview with CNBC-TV18, he said, “The strategic petroleum reserve release is going to prove to be a mistake in the next few months because when we get to the second half of the year, particularly towards the end of the Q3, we are going to find that the US will have taken its strategic petroleum reserve down to multi decade-low levels, demand will be coming back and oil supply is not going to grow by enough to meaningfully make up for the demand recovery that is coming.”
Where is crude headed? Though difficult to predict because of the multiple factors at play, Sanger believes that the second half of the year may see higher prices.
“The market could be extremely tight and USD 125 to USD 150 per barrel oil in the second half, in my opinion, a very high probability because chances of peace breaking out between Russia and Ukraine are reasonably low,” said Sanger.
Talking about India, he said, “If crude
rebounds, back towards USD 110-120 per bbl then there will continue to be an upward pressure on fuel prices in India and therefore inflation is global phenomena and India is no exception.”
Sanger is looking at companies that are inflation-proof in India. He said, “We are big believers in commodity supercycle. So in our India portfolio, we are looking at companies that are more inflation-proof and commodity centric, more capex centric sectors that did well in the 2000-2007 cycle rather than the companies that did well in the 2010-2019 cycle.
For the entire interview watch the accompanying video