ARK Invest’s Cathie Wood Admits $12 Oil Bearish Call Defeat

Crude oil prices continue to rise as Russia’s ongoing invasion of Ukraine and the possibility of a ban on Russian oil and cuts to gas supplies to Europe raise concerns of supply shortages. Oil prices spiked to their highest levels in 14 years on Monday after Russia issued a stark warning to the West that oil could reach $300 a barrel if sanctions continue.

As the price of oil soars, ARK Invest’s Cathie Wood took to Twitter to admit she didn’t get her $12 oil price forecast correct back in 2020. At the time, as oil was trading at about $40 a barrel after trading in negative territory in the early days of covid, Wood believed that despite resistance from the oil industry, the transition to electric vehicles was accelerating demand, leading her to a peak oil conclusion.

Since the tweet, however, oil prices bottomed and kept making higher highs. As of writing, U.S. benchmark crude was up $9.49 to $128.88 per barrel while Brent crude, the international price standard, added more than nine points to $133.10.

Quoting her July 2020 tweet, Wood said oil demand probably hit a secular peak in 2019. She attributed the recent soaring oil prices on supply shock resulting from energy insecurity policies of the Biden administration, global ESG mandates and more recently the Russia-Ukraine conflict.

Despite these market and geopolitical dynamics, Wood, who again, had predicted that oil would trade at around the $12 level — the level reached after the 1973 OPEC crisis — appears to have admitted defeat. She, as per her tweet, now concedes that she “got the supply shock wrong.”

That said, she notes that the “accelerated transition toward electric transportation will destroy oil consumption at the margin” and that longer term “oil prices will collapse under the weight of lower demand.”

I got the supply shock wrong. That said, the accelerated shift toward electric transportation will destroy oil consumption at the margin. Long term, though longer term than I expected, oil prices will collapse under the weight of lower demand. Innovation solves problems!

— Cathie Wood (@CathieDWood) March 7, 2022

While Wood’s timing wasn’t certainly impeccable, and this obviously due to unforeseen geopolitical events, the premise of her call was right. The fact is, higher oil prices will encourage fuel demand destruction while driving cost-conscious consumers more quickly into electric vehicles.

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