IE poll: Managers waiting out Middle East crisis instead of revising oil and gas exposure

Managers are waiting to see how the political crisis in the Middle East pans out before making any changes to their oil and gas exposure, an exclusive poll from InvestmentEurope reveals.

The majority of respondents, 57%, said the situation in the Middle East was not causing them to pull out of oil and gas funds, while 27% said they were and 19% were undecided.

Unsurprised by the results was Ronald Doeswijk, chief strategist for Robeco, who said the situation in the Middle East was hard to predict.

“You are measuring the risk of social unrest. It can rise suddenly; it is so hard to draw conclusions about how unrest will develop.”

As most fund managers tend to take a medium to long term view, they are likely to hold their position until the situation is clearer, he said.

Asked what it would take for fund managers to revise their positions, he said if oil prices went up another $30-40 a barrel in one month, and stayed that way for two months, the deflationary shock could be so big the world economy would be affected.

In that case, managers would be likely to change their view, he said.

Didier Duret, chief investment officer at ABN AMRO Private Banking in the Netherlands, yesterday sought to allay fears about the impact of events in the Middle East, although he did not rule out what could happen in unforeseen circumstances.

“Contrary to conditions surrounding previous oil shocks, current events are occurring against a backdrop of increasing economic momentum.

“We foresee only a moderate oil-supply disruption with limited impact on global growth – without excluding the prospect of an extreme scenario,” he said.

Doeswijk meanwhile made the point that oil had been rising over a longer period prior to the situation in the Middle East developing.

“Before the crisis started, commodities and the oil price were on the rise, it has only accelerated that rise,” he said.

He described the current phenomenon as a “temporary peak in the market”.

“We expect it [the oil price] to drop in the years ahead by $10, and then increase again.”

The commodities market as a whole will reach a peak in the next few years, he said, but there is a case for holding out on oil.

“Oil scores best on a revision perspective, those companies still show surprises,” he said.

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