Gwynne Dyer: Asia may soon put world over a barrel

Nine of the past 10 serious downturns in the world economy followed a spike in the price of oil. And we are heading for another spike, with oil near the peak of US$78.40 a gallon that it reached almost exactly a year ago.

A record number of options contracts are now being sold that entitle customers to buy oil in the future at US$100 ($131) a barrel.
That tells you where the inside players think the price of oil is heading, since those options will only be of value if the price were actually above $100 a barrel. That is the price that Goldman Sachs, the world’s biggest brokerage house, predicted oil would reach by 2009.

However, one big negative – further disruption of supplies from Nigeria or Iraq, say – and oil could be trading at more than $100 a barrel by next month.

But the concern is not really about oil prices. It’s about what more expensive oil will do to the world economy – and the professional optimists are still optimistic.

New Zealand Herald