Nicolai Tangen, CEO of Norway's Norges Bank Investment Management, warned the world's largest sovereign wealth fund faces a potential total loss of its $2.3 trillion in value—even as the fund reported its best quarterly earnings in six years, with first-half returns exceeding 9 percent and a gain of approximately $185 billion.
Tangen made the remarks at a political conference in Arendal, Norway. "Can the oil fund disappear?" he asked. "The answer to that question is 'yes' and the worst is that in the world we live in now, it is not completely improbable."
The fund, which invests proceeds from Norway's oil and gas production, has doubled in value in less than a decade, reaching $1 trillion in 2017. That growth occurred during what Tangen described as an "abnormal" three-decade period marked by low taxes, inflation and interest rates.
Norges Bank Investment Management holds stocks, bonds, property and renewable energy projects abroad. The fund now accounts for roughly a quarter of Norway's public spending, up from about 10 percent a decade ago.
Tangen did not point to any specific recent market development as the trigger for his concern, citing general conditions and historical patterns instead. Stress-test scenarios he has discussed include nuclear war, biological terrorism and an "AI bubble" burst. Combined with scenarios such as a U.S.-China trade war, those events could produce losses of up to 80 percent of stock market investments.
He drew parallels between current conditions and the period preceding the 1929 stock market crash, specifically citing the rise of tariffs.
Tangen also acknowledged the market's current resilience, saying the economy continues to rally even during periods of negative news. He said companies have strengthened supply chains and built in backup systems, giving businesses more flexible supply situations. Had tariffs and trade barriers been predicted two years ago, he said, the market's current strength would have been unexpected.
Tangen framed his public warnings as an exercise in "mental emergency preparedness"—an effort to prepare stakeholders for severe downturns even as the fund posts strong returns.
