Mark Matthews, head of investment research at Bank Julius Baer, speaks on the geopolitical environment, if Russia-Ukraine conflict will lead to further hike in crude oil rates, the impact of its surge in India, and US Fed rate, in his conversation with CNBC-TV18.
Brent crude oil price retreated from over seven-year high. It fell to $101 on Friday (February 25).
The expert believes if crude oil is above $100 a barrel, it may be a threat for oil prices to go high, but speaking on whether this will pose a problem to India’s oil supplies, he rejected it saying it is not at all a concern now for the country.
Rejecting supply aspect, he says India will not have these concerns despite the Russia-Ukraine conflict. He also says the oil route from Canada, Iran, US, and Venezuela is still open.
“There is possibility of increase in supply of oil in the near term. There could be a surprise from Iran, probably 1.3 million barrel/day. 2.8 million barrel/day from other places in the world like Canada, Venezuela and the US. This makes other areas profitable,” he tells.
But, he believes rise in oil prices will have an impact on Indian inflationary scenario.
Mark Matthews claims, “Brent prices have gone high and now have come back to $101. Would be surprised if oil stays at $100 for too long. If it comes down, it would ease the concerns of inflation in India.”
India is not dependent on Russian oil as their supplies account for a very small percentage.
He does not expect the US Fed rate hike in March to be high. Believing that there is a need to confront strong inflation in the US, though its economy being good at the moment, says Federal Reserve may raise interest rates next month despite uncertainty posed by Russia’s invasion of Ukraine. He is of the view that the interest rate hike by 50 bps is highly unlikely.
“50 bps hike from the Fed is highly unlikely,” says Mark Matthews.
