ARK Invest Predicts Oil Could Fall to $30-$35 After Hormuz Reopens
Cathie Wood’s firm predicts a sharp oil price drop once the Strait of Hormuz crisis ends, citing a structural shift toward electric transportation.
Key points
- ARK Invest predicts oil prices could drop to $30-$35 per barrel once the Strait of Hormuz reopens.
- The firm cites a 2.5 million barrel per day drop in global demand as a key driver for lower prices.
- Transportation accounts for 57% of global oil demand, with a growing shift toward electric grid power.
Cathie Wood’s ARK Invest predicts oil prices could fall to $30-$35 per barrel. This projection follows the recent reopening of the Strait of Hormuz. The firm argues that global demand is structurally declining due to a shift toward electric vehicles.
According to an investor release shared on Tuesday, ARK Invest cites International Energy Agency data. Global production is expected to drop to 100.7 million barrels per day. Meanwhile, global demand is projected to decline by 2.5 million barrels per day. This divergence suggests a significant oversupply in the near term.
Historical Quota Cheating Drives Price Drops
The firm draws a parallel to 1986, when OPEC quota violations caused a crash. Saudi Arabia increased production, sending prices down from $23 to $9 per barrel. ARK claims Iraq, Nigeria, and Kazakhstan are currently exceeding their limits. This behavior mirrors the historical pattern that previously collapsed market values.
The United Arab Emirates has also significantly boosted output. Production rose from 2.3 million barrels in March to 4.1 million in June. This increase muted price impacts despite regional instability. ARK suggests these supply shifts are independent of geopolitical tensions.
Transportation Shifts Toward Electric Grid
ARK argues that transportation is moving away from oil. This sector accounts for roughly 57% of global oil demand. The firm points to electric robotaxis and autonomous trucks as key beneficiaries. These technologies are powered by batteries charged from the electrical grid. This transition reduces reliance on liquid fuel for mobility.
Countries like the UAE are investing in natural gas and nuclear power. These sources support the battery technology driving new vehicles. ARK suggests that oil reserve values may have peaked in 2008. At that time, prices reached roughly $145 per barrel. The current price spike may be temporary.
Diplomatic Talks Signal Potential Resolution
President Donald Trump addressed the United Nations General Assembly recently. He stated that the U.S. prevented Iran from obtaining nuclear weapons. He also highlighted productive talks between the U.S. and Iran. These discussions are mediated by special envoys. The diplomatic progress suggests a potential end to the current crisis.
Market data reflects the ongoing volatility. West Texas Intermediate crude futures declined to $89.66. Brent crude futures fell to $98.98. Gasoline prices in the U.S. averaged $4.4744 per gallon. According to Benzinga.com, these figures show a slight decline. However, the market remains sensitive to geopolitical developments.
