Oil prices will fall to below $100 a barrel within the next month because markets are over estimating the potential of Western military action against Iran, said Andrew Su, CEO of commodity and currency broker, Compass Global Markets.
AP
"We've got a $15 premium built in (to the current price) because of this fear of an escalation in the Middle East, and that premium is going to unwind. The premium is excessive and we'll see oil fall below a hundred dollars in the next month or two," Su told CNBC on Tuesday.
He expects increased diplomatic efforts rather than any military action to help solve the impasse over Iran’s nuclear program.
Su also believes that fears of a supply squeeze are unwarranted, and the U.S. government will not need to tap the Strategic Petroleum Reserve (SPR) to try and bring down prices.
"Stockpiles are increasing (in the U.S.) and gasoline demand is at multi-year lows at the moment. So the fundamentals are actually pointing to a lower oil price, and all this brouhaha about the oil price continuing to rise is actually an Iranian fear premium," Su said.
U.S. crude futures have risen 9.3 percent so far this year, but Su’s outlook for WTI crude is bearish over the short to medium term.