Marc Faber, author of the Gloom, Boom & Doom Report, believes the worst of the oil price plunge is over.
“There is a real tension between Iran and Saudi Arabia. However, supply will have to go back up once the oil price has hit $30-per-barrel because production at this point is no longer sustainable,” he told Citywire Deutschland.
In getting a deal struck between oil-exporting countries a big focus has been on political relationships between Iran and Saudi Arabia, Citywire Deutschland reported.
Faber says Saudi Arabia has got more to lose from a low oil price.
“Saudi Arabia and Iran are completely different. Iran is three times as big and the people are far better educated. In Saudi Arabia the fear is a lot higher because the economy is so dependent on oil. How do you want to diversify a desert?”
Turning to his own investments, Faber has one quarter of his fund in equities, 25% in property, 25% in precious metals and 25% in cash and bonds. He is currently bullish on South East Asia, after having reduced this position in 2013 on higher valuation fears, Citywire Deutschland reported.
“Since their high in 2013, valuations have come back down again. The stocks are not so cheap as in 2009 for example but given other investment opportunities, they look attractive.”
Meanwhile, other prominent financial experts agree that oil may be in for a prolonged rebound.
The lows of the first quarter are “likely behind us,” Goldman Sachs Group Inc. said in a note dated April 22. Prices have risen from their lows amid a spate of large supply disruptions caused by pipeline outages and worker strikes, Goldman said, according to Bloomberg.
"The view that the glut will clear this year is gaining traction," said John Kilduff, partner at Again Capital LLC, a New York hedge fund focused on energy. "The freeze talk will probably amount to nothing but is providing support."
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