SIMON BROWN: I’m chatting with JD Hayward, an equity analyst at Flagship Asset Management. JD, I appreciate the time today. You put out a note on crude oil. I had never really thought of it, but of course advancements of the last, what, 150 years are pretty much all ultimately driven down to crude. It is the most important commodity on planet Earth by a huge, long way.
JD HAYWARD: That’s true. In the last month or so, let’s say the last month-and-a-half, we’ve actually seen crude prices increase by quite a lot. That’s been driven in the short term by things like US demand proving incredibly resilient [and] strong GDP numbers coming out of there. On the other side you’ve got others thinking it should fall back quite a lot towards the latter half of the year.
SIMON BROWN: Yes, of course, and the reserves. They are the powerhouse, particularly in the reserves. A lot of folks then – if you’ve got oil sort of remaining at the elevated levels – certainly [see] opportunities there. You’ve [noted] a few stocks, and a lot of folks would look to the more traditionals – Shell, ExxonMobil – and certainly they’re recording record profits. But there are others a little more downstream that you like.
The other thing we like about them is they’ve got large exposure to the Middle East, specifically Saudi Arabia, and someone like Saudi isn’t really beholden to shareholders when it comes to ESG concerns in terms of investing in new capex cycles.
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