Crude may rise before additional production: Marc Faber

Rising crude oil prices has been a matter of grave concern in the past few days. Investment guru Marc Faber believes that crude may rise further before additional production comes into play. "We need to find new oil fields and develop them and that is very costly. I would estimate the marginal cost of adding new oil at USD 80 per barrel," he said.

With a very optimistic view, he said demand in the western world is likely to pick up going forward and so will the demand in emerging markets. On this kind of outlook he suggests to go long on oil. "Of course, we have had a huge run up, and I think energy shares and oil is due for correction, but in an optimistic scenario, you should be long oil, and also other industrial commodity," he said. In a very pessimistic scenario, one will have to assume that the unrest will shift also to Saudi Arabia, and other countries in the gulf, he said. "And, at that stage, maybe production will be curtailed, and in that case oil would go up ballistically," he added.