Oil Price "may hit $200 a Barrel"
A Goldman Sachs energy strategist warns that this may happen in as little as six months. This is because of the demand driven price of oil.
Goldman Sachs energy strategist Argun Murti made the warning as benchmark US light crude passed the $123 mark for the first time.
Surging demand was increasingly likely to create a “super-spike” past $200 in six months-to-two years’ time, he said.
Oil prices have now risen by 25% in the
last four months and 400% since 2001.
US sweet, light crude hit an all-time peak of $123.53 (£63.25) on Wednesday, while London Brent crude jumped to $122.32.
Mr Murti correctly predicted three years ago – when oil was about $55 a barrel – that it would pass $100, which it reached for the first time in January of this year.
The article goes on to mention some of the factors driving the price up.
Soaring global demand for oil is being led by China’s continuing economic boom and, to a lesser extent, by India’s rapid economic expansion.
Both are now increasingly competing with the US, the European Union and Japan for the lion’s share of global oil production.
This additional demand comes at a time of continuing production problems in a number of oil-producing nations.
Production is down in Nigeria after the latest attacks on pipelines this week by anti-government militants, while Iraqi exports through the north of the country have been hit by renewed cross-border raids by Turkish forces against Kurdish insurgents.
Oil prices are also rising as the key US summer driving season approaches.
You have to wonder how big a factor the US driving season will be with people already feeling the pinch with higher pump prices and food also on the rise.
If the oil price does hit $200 we can expect another wave of food price increases as the increased costs hit the farmers.
You have to wonder how much this will affect the global economy.
BBC NEWS | Business | Oil price ‘may hit $200 a barrel
You have to think that the price will settle before this because of reduced demand. It is possible that it will hit the $200 but I don’t think that the world economy will handle it without a major recession which will cause the price to normalise.