If you thought 2014 was volatile, hold on to your hats this year as the price of oil could hit $30 a barrel and the bond markets will outperform, according to Bob Janjuah, a closely-watched strategist from Nomura Securities.
He told CNBC on Monday that there was little chance of Saudi Arabia changing its decision not to cut oil production, despite the 60 percent fall in prices since June 2014, and the cost of a barrel could head even lower.
"Oil can go up in the short-term but I think actually that there's some political motivations at play here and Saudi Arabia is at risk of losing its position as the marginal price-setter and I don't think they want to lose that position," Janjuah, co-head of cross-asset allocation strategy at Nomura, told CNBC Monday.
"I think the Saudis will potentially carry on (with their policy of not cutting production) and production will remain high but my head target is $30 - $35 as where we could get to. Where prices are now, I think a twenty dollar move is more difficult but I think that's the risk and out there," he told CNBC Europe's "Squawk Box."
On Monday, benchmark Brent crude futures were trading at nearly $49 per barrel and U.S. crude was trading at $47 a barrel. Last week, oil prices dropped to around $45 a barrel – near six-year lows – but prices rebounded Friday after the International Energy Agency said that there were signs "the tide will turn" in the oil market.
The precipitous fall has occurred on the back of an oversupply in the commodity and lack of demand on slowing global growth. Prices have continued to fall after the Organization of Petroleum Exporting Countries (OPEC) decided not to cut output signalling that it was happy to let prices fall so that it could maintain its market share and put pressure on U.S. shale oil producers.
Janjuah believed that Saudi Arabia – the leading member of OPEC -- would be content to maintain that pressure on the U.S. along with other major oil producers such as Russia. While some economies could benefit from lower oil prices, such as major importer Europe, Janjuah warned about the U.S. whose energy industry has grown thanks to its "fracking" of shale oil.
"If you look at the U.S. economy, the bulk of capital expenditure and jobs growth has been in and around the shale and energy-related sectors so if crude is down around the $30-$35 mark for a significant period of time I think you're going to see a default cycle in the U.S. energy sector."