Marc Faber Says Oil Prices Could Go Ballistic

Even though oil prices have already soared by about 15 percent in 2011, Gloom Boom & Doom editor Marc Faber says the price of oil will go ballistic if unrest in the Middle East spreads to Saudi Arabia.

Speaking to CNBC, Faber said: " I think long term you should be exposed to energy in either scenario....if you are extra bearish and believe that War World III is going to start soon, as I believe, or in an optimistic scenario".

Addressing the fundamentals of the oil market, Faber said: "What we had over the last couple of years is essentially a reduction in demand from the developed world, the US, Western Europe and Japan, and continued growth in emerging economies.

"So, if you take a very optimistic view of the world, namely a global economic recovery, demand in the Western World will pick up and demand in the Emerging World will continue to rise strongly, so from a very optimistic point of view you should be long oil," he recommended.

On the flip side, "in a very pessimistic scenario you have to assume that unrest will shift to Saudi Arabia and other countries in the gulf and at that stage the production is curtailed and in that case obviously oil will go up ballistically."




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