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One Hedge Fund Manager Warns ‘Largest Supply Shock Ever’ Could Bring $300 Oil

One Hedge Fund Manager Warns ‘Largest Supply Shock Ever’ Could Bring $300 Oil

Barrel prices at $300 would see prices at $7 per gallon for drivers. And as crazy as that sounds, one prominent hedge fund manager said this week that prices that high are “not impossible.” Here’s why.

Energy companies’ reluctance to pour money into new production could cause an explosive move in crude to $300 a barrel. That’s according to Pierre Andurand, one of the most high profile hedge fund managers in the oil sector.



In a series of tweets, which have since been deleted, Andurand said that fears about the impact of electric vehicles on future demand has limited oil companies’ investments in projects with long lead times.

“So paradoxically, these peak demand fears might bring the largest supply shock ever,” Andurand tweeted. “If oil prices do not rise fast enough, $300 oil in a few years is not impossible.”

Andurand, who runs oil-focused Andurand Capital Management LLP and is known for being bullish on the market, also said that $100 per barrel oil won’t hurt the economy. “Demand is inelastic,” and the economy can absorb price increases, he said.

“So no, $100 oil will not kill the economy… And we need +$100 oil to encourage enough investments outside of the U.S.”

Andurand’s tweets were first spotted by Bloomberg’s chief energy correspondent, Javier Blas, who notes how the hedge fund manager’s comments echo those of Saudi Oil Minister Khalid Al-Falih. Al-Falih suggested in April that prices could rise from their current level at $74 a barrel without doing economic damage.

“We have seen prices significantly higher in the past, twice as much as where we are today,” and the global economy is capable of absorbing costlier crude, Al-Falih said.



Andurand was among the top commodity hedge fund managers who met with Al-Falih last July in London where they discussed the state of the oil market. OPEC and its partners are planning to maintain their production cuts—which have helped to spur higher oil prices—throughout this year.

Andurand Capital Management LLP lost nearly 10% in the first two months of this year amid volatility in the energy market. The fund has closed every year in the green since it was launched in 2013.



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