Wealth Manager - the site for professional investment managers

Register to get unlimited access to Citywire’s fund manager database. Registration is free and only takes a minute.

Analysts warn oil could pass $200 on Iran tensions

Analysts warn oil could pass $200 on Iran tensions

The price of Brent Crude oil could surpass $200 (£126) a barrel on the back of rising tensions between Israel and Iran, which would have negative effects on developed economies, according to RMG Wealth Management.

Oil hit a nine-month high yesterday, peaking at around $124, spurred by supply problems in South Sudan, Libya and Yemen as well as the escalating concern over disruption in Iran.

David Man, partner at RMG, said the price of oil is rising again and dramatic increases, as seen last year and 2008,could impact developed economies and spur inflation.

He said: ‘The rising tensions between Israel and Iran are clearly helping push oil prices higher, and although we have no idea of what the probability is of a real escalation here, we suspect that it would cause oil prices to spike above US$150 and maybe to above $200.’

He added Brent is approaching the highs it hit in the wake of the Arab Spring last year, while the trend has been solidly higher since last October. This fuelled inflation which peaked at over 5% last year hitting developed economies, while wages were not rising.

He added: ‘Today a spike in oil prices is probably the greatest risk to markets and so we need to watch the Middle East closer than ever when we make any investment decisions.’

According to analysts at JP Morgan, upside risk to improving economic data needs to be tempered by recent concerns emanating from the energy markets.

The analysts said: ‘The price of Brent crude oil has moved above $120/bbl for the first time since early May of last year, reflecting a roughly 10% rise since the start of this year.

‘Although some of this increase reflects shifting expectations about economic growth, the latest move up also likely reflects concerns surrounding a possible oil embargo on Iran.

They said in response to Iran’s nuclear ambitions, the US and European Union have agreed to impose a set of aggressive sanctions on Iran.

While Europe plans to curb imports starting in May, the US will impose sanctions, due to take effect at the end of March, that would deny access to the US payments system to anyone that does not show an effort to reduce trading activities with Iran.

They added: ‘The threat of sanctions is combining with a cold snap across Asia and Europe to push up prices.’

Crude was at $120.13 at 9:30 this morning.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Citywire TV
Play Wealth Manager Retreat 2017: size isn't everything

Wealth Manager Retreat 2017: size isn't everything

We asked our delegates at the Wealth Manager Retreat what they think about the recent wave of consolidation in the industry.

1 Comment Play CIO Tapes - part 3: 'passive funds are anti-capitalist'

CIO Tapes - part 3: 'passive funds are anti-capitalist'

Citywire recently gathered three of the UK's leading fund investment heads to discuss their hopes, fears and the issues that their jobs throw at them daily.

Play CIO Tapes: do investors have it as good as it gets?

CIO Tapes: do investors have it as good as it gets?

Citywire gathered three of the UK's leading fund investment heads to discuss what they fear and what makes them cheer about the year ahead

Read More
Your Business: Cover Star Club

Profile: Rathbone's Newcastle boss on the road to £1bn

Profile: Rathbone's Newcastle boss on the road to £1bn

Starting from zero assets on day one, Rathbone's Newcastle team now looks after just over £400 million in clients money

Wealth Manager on Twitter