Barring certain situations and moments, and despite the weight of the idea of a global recession that could lead to lower demand for crude oil, “the price of oil would remain between $80 and $100 a barrel for most of the year.” according to iBroker analyst Antonio Castelo, who makes several arguments for this: “the elasticity of crude oil demand (no matter how often it is said today that oil is difficult to replace as an energy factor), the own countries capacity producers, since after years without investments they are very limited ability to increase production to meet demand, the inclusion of China and demand growth on their part, and the fourth argument is a drop in supply because producing countries would likely cause production to slow down to keep prices up, and that’s what happened in the end.”
However, it seems clear that oil companies around the world will benefit. But what are the bets? Those of iBroker happen in Spain Repsol. “He’s a born winner. Repsol has implemented a business model that aims to differentiate its businesses and is generating significant cash flow by capitalizing on these increases in crude oil, through its traditional businesses, while investing in decarbonization activities, industrial activities, but more specifically in renewable energy, and it’s doing very well. In addition, it has committed to achieving carbon neutrality by 2050 and reducing its carbon emissions targets,” emphasizes Castelo.
The analyst adds, “Repsol will continue to generate significant cash flow in 2023 if oil prices stabilize between $80 and $100 a barrel. Additionally, the strength of its balance sheet reduces debt to virtually zero, and it does a very good job of returning to its shareholders. Analysts give Repsol a price target of EUR 18.23, which corresponds to a potential of 26%.
But beyond the Ibex 35, Antonio Castelo is looking at another stock in the Wall Street sector. “I like Occidental Petroleum, the same bet the great Warren Buffett makes,” he concludes.