Don’t expect crude to stay above $100 for long: Bank Julius Baer

Fears surrounding crude oil shortage resulting from Russia’s invasion of Ukraine has spiked up the price above $ 100 per barrel. In an interview with CNBC-TV18, Mark Matthews of Bank Julius Baer & Co, said that he would be surprised if the price stays above $100 for too long. In fact, he thinks that there is a possibility of oil supply increasing in the near term.

He said, “Oil over USD 100 per barrel makes a lot of places profitable and I would be surprised if it stays at USD 100/bbl for too long and if it comes down, that would ease the concerns over inflation in India.”

On interest rate hikes, he doesn’t think that the US Federal Reserve will hike rates by 50 basis points (bps).

“Three Fed Presidents who spoke last night, February 24, Bostic (Dr Raphael W Bostic of Federal Reserve Bank of Atlanta), Loretta Mester (Federal Reserve Bank of Cleveland and Tom Barkin (Federal Reserve Bank of Richmond) and they all said that Ukraine is an issue and they also said that the economy is good in the US, inflation is high and so there's a need to raise interest rates. They all mentioned Ukraine and that makes me think that 50 bps is highly unlikely,” Matthews said.

Closer home, India’s benchmark indices reacted to the geopolitical tensions as the Nifty 50 index ended 4.78 percent, or 815.30 basis points lower at 16,247.95 on Thursday as news of Russia’s military operation into Ukraine started pouring in, meanwhile the 30-scrip-Sensex closed 4.72 percent or 2702.15 bps lower at 54,529. Nifty opened at 16,515.65 and is up 2.02 percent already while Sensex opened at 55,321.72 and is up 1,133.71 bps.

On being asked if today is the day to buy, he said that there are too many variables at play and one will know only in hindsight about it. “I do not want to say that today is the time to buy. I cannot say because I do not know how things will unfold,” said Matthews.

For the entire interview, watch the accompanying video