See Brent at $140-150/bbl if Syria woes deepen: Swiss Asia

Brent price could reach USD 140-150 a barrel if Syrian crisis escalates and that would lead to further weakness in financial stability in Asia-Pacific, says Juerg Kiener, MD & CIO, Swiss Asia Capital.

“Overall we still see supply side constraints from almost all the countries involved in the Middle East, but people elsewhere like Mexico, Venezuela, Indonesia have falling output, so that does not speak very well on prices,” he told CNBC-TV18 in an interview. He further added that key oil producing county Iraq has not announced yet that their output if falling, but if this violence spreads then output could contracting. Also Read: Mkt to focus on Syria now; buy select financials, says Ambit Cap Below is the edited transcript of Juerg Kiener's interview with CNBC-TV18 Q: This is a panic situation as far as crude is concerned. How bad can it get? Is it reminiscent of the Iraq wartimes at all? A: The news flow of the war machine moving into action in the Middle East is certainly escalating. If you look at the Middle East you start to realise that there are very different interested parties fighting each other. Overall we still see supply side constraints from almost all the countries involved in the Middle East, but people elsewhere like Mexico, Venezuela, Indonesia have falling output, so that does not speak very well on prices. USD 140-150 can be reached. It would have a result in further weakness on financial stability in Asia-Pacific. Q: At this point in time there is just a fear psychosis in the market that the violence could spillover to key producers like Iraq as well. What is your view on how much Syria actually contributes to the oil production? If it does spillover to some of these other key oil producers then how bad the situation could get? A: If you look at North Africa which had violence a year ago, two years ago we, already see falling output there. In Syria also we have got falling output. Iraq so far has not really announced a falling output, but I will not be surprised if output would be contracting too. So, we are not going to have massive supply coming on-stream. As a result, the key issue is going to be if we go to war and what type of war will we have? Where will Iran stand? If the war escalates towards Iran then all bets are off how high the oil price can really go, because in the end that is the key ingredient party in supplying oil to the east. Q: Gold is a commodity which gets positively impacted in wartimes. What kind of levels do you see there? Do you think gold could remain higher for longer than crude? A: The commodity sector made a low in June after a horrible year so far. We have seen short covering and we have seen capex getting cut. That is true for all other commodities that are in a turnaround situation. Oil has been moving ahead while most other commodities have been lagging. Partially some of them will close the gap. Gold looks interesting and it looks like it wants to breakout on the upside. In Indian rupee terms it has made a double top right now. We will see if it is going to break on the upside. I am not quite sure they are in India, but they are going to see new highs later in the year. The other area where we see price moving up is soft commodities which will fall out of bed due to fantastic weather conditions. Higher energy prices will be a real hamper on next year's food production and down the road people will start looking at next year's Futures. There are all sort of areas where the commodity market will have some gaps to close versus energy.