Brent at $100? Hormuz Risk, AI rally and a fragile US market: Andrew Freris flags two-year energy shock cycle

Speaking to ET Now, he suggested that oil prices like Brent may remain elevated and that markets need to adjust to a prolonged phase of disruption rather than a temporary shock.

He said, “It seems like it is going to be a long drawn thing… Does it seem like $100 could be the new reality for Brent?” Freris argued that the strategic importance of the Strait of Hormuz is likely to decline over time as countries develop alternative supply routes.

According to him, “The Hormuz Straits are going to become irrelevant.” He added that energy exporters are already working on bypass mechanisms, saying, “Turkey is outlining pipework. Saudi Arabia already has bypass routes in place.” In his view, such adjustments will take time, making the transition disruptive but structural, and he described the outlook as a “two-year view” rather than a short-term market event.

On equity markets, Freris noted the disconnect between record highs and underlying fundamentals. While global indices continue to scale new peaks, he said the rally is being driven largely by artificial intelligence-related enthusiasm rather than broad-based earnings strength.

Live Events

Responding to a question on why markets remain firm despite global uncertainty, he said, “It is driven by artificial intelligence.” He cautioned that valuations are being pushed higher without sufficient earnings justification, adding, “We will push the S&P to highs on AI, but there is no real earnings justification.” He also expressed discomfort with the level of concentration in US benchmarks and advised caution, stating, “I am telling clients to reduce US positions.” At the same time, he pointed out that several Asian markets have performed better in dollar terms compared to the S&P.
Freris further highlighted the uneven nature of US corporate earnings, noting that while some sectors remain strong, especially those linked to technology and AI, the overall picture is inconsistent. He said, “Earnings from AI and IT are variable.” He also warned that expectations around investment in artificial intelligence may be overstated, remarking, “Investment in AI is massively exaggerated.” According to him, the heavy reliance on a small group of large-cap stocks makes the broader index vulnerable, as “the S&P is driven by about 10 stocks,” which he believes creates discomfort from a valuation and risk standpoint.Overall, Freris sees a widening gap between markets and macro risks, with energy markets adjusting to long-term geopolitical realignments while equity markets remain heavily dependent on a narrow AI-driven narrative. He suggests that both themes—structural energy disruption and concentrated equity leadership—are likely to define global markets over a multi-year horizon rather than in the near term.