Rising oil prices are the biggest risk to the Indian equity story from a five-year horizon, says Christopher Wood, managing director and equity strategist at CLSA in his weekly note to investors, GREED & fear.
He expects oil prices to hit $100 per barrel if the United States (US) ends all Iran sanction waivers after May 2 and suggests the best way to hedge this risk is to own oil stocks. However, as a base-case, Wood expects US President Donald Trump to soften his stand.
“It is also the case that it makes no sense to pick a row with China on buying Iranian oil, and there will be a row if the waivers are not renewed, at the same time as the Donald is hoping to secure a trade deal, and a ‘win’ with Beijing.
It is also the case that Saudi Arabia will be less willing to pump extra oil, in response to Trump bullying, than was the case six months ago,” Wood wrote. Read More