With much speculation about how high oil prices will go amid unrest in the Middle East, one CEO told CNBC on Friday that oil will actually go down, to as little as $70 a barrel.
"Inventories are high. There is plenty of capacity in world shipping. So the disruptions that have caused the 10 percent rise in oil in the last two weeks or so is overdone in the oil market," James McCaughan, CEO of the asset management business Principal Global Investors.
"The oil market is quite thin and quite speculative," he added. "The short-term speculation in the market, whether it's ETFs or hedge funds taking positions, has overdone it given that very little of the world supply has yet been disrupted."
The only thing that would change McCaughan's opinion is if Saudi Arabia has unrest. "I think that is very unlikely. The king is popular in Saudi Arabia. He's just unveiled a stimulus package of social measures of $36 billion."
"The short-term fluctuations are not important," he added.
For that reason, MCaughan's strategy is to use current market discord as a way to rebalance in favor of equities. "World equity markets are down 2 to 4 percent in the last two weeks that's actually an overreaction I would suggest and a buying opportunity."
"My stance on U.S. equities from the beginning of the year has been this will be a 10 to 20 percent year, added McCaughan.
"We're seeing a very strong momentum in the US economy and the oil fluctuations are not enough yet to dispute that," he concluded.
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