$100 a Barrel Oil Coming?

Looks like $100 a barrel oil is coming our way unless Saudi Arabia opens it's spigots to increase the world's supply of oil. Even if they do, any major disruption of oil production anywhere will result in unprecedented oil prices. Here in the US, with discretionary income diverted to energy costs and crashing home equity, the risk of deflation will loom. Few middle income families will have the money to spend on much anything.
International Herald Tribune

The $100-a-barrel oil that Goldman Sachs Group said would prevail by 2009 may be only a few months away. Jeffrey Currie, a London-based commodity analyst at the largest brokerage firm, said that $95 crude was quite likely this year unless OPEC unexpectedly increased production and that declining inventories were raising the chances for $100 oil. Jeff Rubin at CIBC World Markets said $100 a barrel could come as soon as next year.


[..]A record number of options have been sold that give the buyer the right to buy crude oil at $100. The contracts, covering 50 million barrels, pay off only if oil were to go above the target price.


[..]Currie, Goldman's global head of commodities research in London, is predicting that oil prices will probably touch a record high and stay at unprecedented levels for months or years. The all-time high for the benchmark Nymex crude future is $78.40 a barrel on July 14, 2006. "Ultimately, the key to the outlook going forward is when will Saudi Arabia ramp up production," he said in an interview. "If you have a situation in which inventories globally get drawn to critically low levels, the volatility in this market is likely to explode, which significantly increases the probability of $100 oil."


[..]Oil prices could triple in three months to more than $200 a barrel, given the right circumstances, according to Matthew Simmons, chairman of Simmons, a Houston investment bank.