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Economist Gurwitz: Oil Prices Should Rise With Russia Sanctions

By Joe Battaglia   |   Monday, 28 Apr 2014 08:21 PM

With Russia threatening to retaliate for further economic sanctions by the U.S., the global energy markets should brace for more tensions, according to one economist.

Over the weekend, President Obama outlined, from his trip in the Philippines, new sanctions against high-technology exports and other wealthy allies of Vladimir Putin in an attempt to ratchet up pressure on the Russian president. The announcement triggered a spike in crude oil prices, which rose to a seven-week high of $110 per barrel from $108 per barrel in March.

In response, Deputy Foreign Minister Sergei Ryabkov vowed that Russia would respond. "We are certain that this response will have a painful effect on Washington," Rybakov said," the Guardian reports.

David Gurwitz, managing director of the Charles Nenner Research Center, told J.D. Hayworth and John Bachman on "America's Forum" on NewsmaxTV that while he couldn't pinpoint exactly what form that retaliation would take, history has shown the outcome will cause a further rise in oil prices.

"I can tell you cycles suggest what's going to happen with crude and with oil which might indicate a heightening of the tension," Gurwitz said. "We have a target of $122, which indicates — is the demand greater or will there be more strife that causes concern about that?"

Gurwitz said that by looking at the top to tops in any data series of stocks, bonds, commodities, and currencies over history, the CNRC is able to mathematically extrapolate what the news might be that causes a top and a bottom without actually factoring in the headlines.

"Let's go back to 2009," Gurwitz said. "Crude was very low after the tumultuous time in 2008. Everybody was hoping crude would go up, that would indicate a tremendous increase in demand. Now, if crude goes up, everyone is concerned that it's war. So that's part of how we look at things depending on what time and the spectrum of history you are, determines where people want things to go or not."

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Along those lines, Gurwitz suggested that Russian response to these latest sanctions won't necessarily spark a selling spree by gold owners fearing a plummet in prices.

"I think the opposite," Gurwitz said. "The people who are in gold, I'll tell you, we have lots of clients all over the world and we suggested everyone get at it [selling] when gold was $1900 a couple years ago and said for the next few years, which is now, there have been just bounces including this last move from $1300 to $1400. We think that gold is very shortly, within the next month or two, hitting a long term bottom in cycles and will be going up.

"So, I think people won't be selling their gold now."

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