Founder of Mwango Capital, Erick Mokaya, says global oil prices are likely to remain elevated as long as the conflict in the Middle East continues, warning that prolonged geopolitical tensions could sustain inflationary pressures and influence central bank decisions.
Speaking during an interview with ARISE NEWS on Tuesday, Mokaya said oil markets remain closely tied to developments in the Middle East, particularly concerns over possible disruptions around the Strait of Hormuz, with no clear sign of a lasting resolution.
Speaking on recent oil price volatility, he said:
“Oil prices are following the conflict in the Middle East. Until there is a resolution, the chances of oil prices going higher remain significantly high.”
Mokaya explained that while expectations of easing tensions have provided temporary relief to markets, the lack of a lasting settlement continues to support elevated oil prices.
“We hope that a quick resolution to the conflict will unlock more oil from the Middle East. More supply would ultimately translate into lower oil prices.”
On the outlook for global monetary policy, Mokaya said major central banks are likely to maintain current interest rate levels, noting that higher oil prices have not yet had a significant impact on consumer inflation.
“Most central banks are likely to hold interest rates because the impact of higher oil prices has not materially filtered into day-to-day inflation.”
He added that the United States remains relatively insulated from rising oil prices due to its strategic petroleum reserves, while political and economic considerations make further rate increases unlikely.
“They cannot afford a rate hike, especially in the US during an election year when households are already under pressure from high borrowing costs.”
Addressing the recent sell-off in semiconductor stocks, Mokaya said investor concerns over artificial intelligence spending reflect uncertainty over whether large-scale investments will generate sufficient returns.
“There is a lot of capital expenditure being spent on AI, but not much return on investment yet. The market is simply reacting to that uncertainty.”
He said progress by Chinese AI developers, including lower-cost models, has also led investors to question the scale of spending by major Western technology companies.
“If China can achieve similar results without spending at the same level as Western companies, investors will naturally question whether the current level of AI spending is justified.”
Speaking on China’s push to develop advanced chipmaking technology, Mokaya said Beijing’s drive for self-reliance is driven by growing restrictions on access to cutting-edge semiconductor technology.
“China wants to become self-reliant because it recognises that depending on Western companies for critical technology is becoming increasingly difficult.”
On Apple reclaiming its position as the world’s most valuable company, Mokaya said investors had previously underestimated the company’s artificial intelligence strategy, adding that partnerships could strengthen its position.
“Apple does not necessarily need its own frontier AI model. It can partner with leading AI developers while continuing to deliver strong products and services.”
Speaking on Nvidia, Mokaya said the company’s strong performance has already been reflected in its valuation, leaving its shares more vulnerable to negative market sentiment.
“Nvidia’s outperformance is already priced in, so when negative news emerges, the stock naturally comes under pressure.”
Concluding, Mokaya said Kenya’s stock market has delivered strong returns this year but warned that unresolved Middle East tensions, inflation risks and the country’s upcoming election cycle could weigh on market performance in the second half of the year.
“My outlook for the second half of the year is more cautious, but I remain fully invested and hopeful for the best.”
Goodness Anunobi
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