Gopichand Hinduja, co-chairman of the Hinduja Group, expects oil prices to remain under pressure but sees them returning to $40-50 a barrel once the economic situation stabilises.
In an interview with CNBC, the India-born British billionaire said weakness in oil prices may persist due to lack of consumption and warehousing woes.
"I don’t think oil prices are going to change from where they are because the consumption is not there, and the warehousing is not there," he said. "Keeping all this in mind, no sooner that things get settled down, I think the oil prices will go back in the range of $40 to $50."
The Hinduja Group operates in various industries including automotive, oil, and speciality chemicals as well as banking and finance. It runs private sector lender IndusInd Bank in India.
Gopichand, who along with his brother Srichand, is considered one of the wealthiest men in the UK felt that the sharp decline in oil began once Saudi Arabia and Russia failed to reach an agreement on a production cut in early March, but the coronavirus pandemic "made it worse because of no demand."
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The global shutdown of businesses in the wake of the coronavirus pandemic has wiped off nearly a third (nearly 10 million bpd) of the world's oil demand. While the OPEC and Russia did agree to production cuts earlier in April it was not enough to cushion the unprecedented fall-off in demand.The price on the futures contract for West Texas Intermediate (WTI) fell 13 percent to $11.11 per barrel, recovering from a low of 25 percent. Meanwhile, Brent crude traded down 4.4 percent at $19.11 per barrel.