As the geopolitical risk premium in the Middle East fades and weak economic data from the Eurozone trigger demand concerns, both crude oils fell by more than 2% again. However, the "God of Crude Oil Trading," Pierre Andurand, expects there is still room for oil prices to rise.
On Monday, both major benchmark crude oils fell by more than 2% as the Middle East, the world's largest oil supply region, intensified diplomatic efforts to curb the escalation of conflict between Israel and Hamas. This downward trend continued on Tuesday, with both U.S. and Brent crude oils falling by more than 2% again.
A series of economic data from Germany, the Eurozone, and the UK previously painted a pessimistic picture, casting a shadow over the outlook for oil demand.
In addition, the International Energy Agency (IEA) stated that, based on current government policies, it is expected that demand for fossil fuels will peak by 2030.
Bank Julius Baer analyst Norbert Ruecker said, "The inherent risk premium in oil prices should disappear within a few weeks... We expect oil prices to be lower next year."
However, on Tuesday, Pierre Andurand, known as the "God of Crude Oil Trading," said he expects Saudi Arabia to maintain its current supply restrictions until oil prices reach at least $110 per barrel.
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The founder of Andurand Capital Management LLP stated in a Q&A session at the Saudi Arabia "Future Investment Initiative" conference (FII) in Riyadh that as crude oil inventories decline in the coming months, "the market will have to seek more supply at some point."
He added, "Saudi Arabia will have to decide when and at what price to resume supply. In my view, its production adjustments may come when oil prices reach around $110 per barrel. Therefore, there is still room for prices to rise."
Since July, Saudi Arabia has pledged to unilaterally reduce production by 1 million barrels per day on top of existing production restrictions. The country stated earlier this month that it would continue its additional production reduction plan until the end of this year.
Andurand said that Saudi Arabia's production policy remains a decisive factor in crude oil prices. Despite the war between Israel and Hamas potentially leading to more severe conflicts in the Middle East, the global benchmark Brent crude oil price has still fallen back below $90 per barrel. He believes that a direct confrontation between Israel and Iran "is not impossible," which could change the situation.Andurand predicts that oil demand will peak in the late 2020s of this century, and then decline.
When discussing metals, he warned that the copper market may encounter trouble, as mining supply is expected to peak, while demand accelerates due to the energy transition.