As oil continues to search for a bottom after a nearly 40% nosedive since June, CNBC’s Jim Cramer turns to oil tycoon and prominent investor T. Boone Pickens on the subject to get a better sense on where the high demand commodity is headed. Cramer thinks Pickens understands the energy space better than anyone else and could shed light on the importance of OPEC and impact of Russia on the industry.
“They didn’t say they wouldn’t cut, but OPEC will have to cut, and that is what’s going to happen”, Pickens said. “The Saudis are the ones that make the cut. They can take $70 oil and take it out 10 years — they have the cash reserves that allow them to do that. But they can’t do that to the rest of OPEC.”
The 86-year-old Pickens predicts that the plunging oil price — Brent rose to $71 a barrel on Wednesday — would rebound to $100 a barrel in the next 12 to 18 months. Pickens, who chairs the energy hedge fund BP Capital Management, also said OPEC will eventually move to slash oil production, possibly in the first half of 2015.
As for Russia’s impact to the energy space, Pickens said, “To me, Russia is a poor country. They have a couple of assets, and that’s it. I put oil and gas as one asset ; the other asset is Vodka. They don’t export that, they drink it. They have one asset that provides for their GDP, and that’s oil and gas. They can feel a 10 cent drop.”
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