ALTERNATIVE MARKETS UPDATE – END SEPTEMBER 2023

​Rising oil prices have been in the news frequently over the past weeks. Back in July 2023, WTI crude oil was below $70 per barrel and has temporarily claimed above $95 per barrel as of the end of September 2023. Price levels have now reached heights last seen almost a year ago, as shown in Figure 1. The latest surge in price was likely caused by continuously declining reserves, which also reached a low point in more than a year. Previously oil prices have been mostly rising, due to production cuts by OPEC+, which was a response to the decline in oil prices the year before. The latest spike was further strengthened by further voluntary cuts by Saudi Arabia and Russia, which are likely to be maintained until the end of the year. Price estimations on oil prices towards the end of 2023 hover around $95 to slightly above $100 per barrel.

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RESEARCH PERSPECTIVE VOL. 212 September 2023 Alternative Markets September 2023 Rising oil prices have been in the news frequently over the past weeks. Back in July 2023, WTI crude oil was below $70 per barrel and has temporarily claimed above $95 per barrel as of the end of September 2023. Price levels have now reached heights last seen almost a year ago, as shown in Figure 1. The latest surge in price was likely caused by continuously declining reserves, which also reached a low point in more than a year. Previously oil prices have been mostly rising, due to production cuts by OPEC+, which was a response to the decline in oil prices the year before. The latest spike was further strengthened by further voluntary cuts by Saudi Arabia and Russia, which are likely to be maintained until the end of the year. Price estimations on oil prices towards the end of 2023 hover around $95 to slightly above $100 per barrel. Figure 1: Crude Oil WTI Price Development in the Past Year, Source: Investing, September 2023 While oil prices are on the rise, the macroeconomic situation has stabilized somewhat. The Fed, the BoE, and the SNB have not raised interest rates, which was the first time for the BoE in the past two years. Only the ECB increased its target interest rate by 25bps, which is now at 4.5%. Inflation was also coming down for most economies in August 2023. The UK, which had the biggest issues with inflation, now sees its inflation rate at 6.7%. While it is still very high, the country recovered from its inflation rate above 10%, which turned out to be very resilient and notably pressured the country for nearly 9 months. In the EU, the situation was similar, but not to that extent. It sees its inflation rate at 5.9% and is continuing its promising downward trajectory. The US reached its inflation low in June 2023 with only 3%. Since then, inflation has begun to rise again and is now at 3.7%. Switzerland managed to keep inflation down for the majority of this period with its peak being only 3.5%. By now, Switzerland’s inflation is back at an acceptable level of 1.5%. Figure 2 summarizes the development of interest rates and inflation rates since January 2022. While the current development overall is positive, the macroeconomic situation still causes a lot of uncertainty. In particular, the threat of a potential recession keeps these economies in a cautious state. Figure 2: Interest Rates and Inflation Rates in the US, EU, UK, and Switzerland from January 2022 to August 2023, Sources: Stone Mountain Capital Research, Fed, ECB, BoE, SNB, and Government Offices, September 2023 STONE MOUNTAIN CAPITAL Stone Mountain Capital is an advisory boutique established in 2012 and headquartered in London with offices Pfaeffikon in Switzerland, Dubai and Umm Al Quwain in United Arab Emirates. We are advising 30+ best in class single hedge fund and multi-strategy managers across equity, credit, and tactical trading (global macro, CTAs and volatility). In private assets, we advise 10+ sponsors and general partners across private equity, venture capital, private credit, real estate, capital relief trades (CRT) by structuring funding vehicles, rating advisory and private placements. As of 19th May 2023, Stone Mountain Capital has total alternative Assets under Advisory (AuA) of US$ 61.2 billion. 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