En route to $75 oil

Oil prices are high and likely to climb higher through 2005 and probably into 2006. Despite ongoing comments about the market actually having enough supplies, the reality is that international oil markets are not driven by anything rational. Rather, fear and loathing sit at the back of each upward oil trade. A confluence of increased demand and questionable limits to supply have resulted in a runaway oil market during the summer of 2005, with oil crossing $65 a barrel. The idea of oil hitting $75 a barrel is no longer so farfetched.

High oil prices are likely to be around for a while. On the supply side, nagging points of concern include the expectation that non-OPEC oil supplies, mainly in the Gulf of Mexico and the North Sea, are set to fall. According to the International Energy Agency (IEA) in August, non-OPEC oil supplies are forecast to fall 200,000 barrels a day.

Asia Times

…The new world of higher oil prices has considerable implications for the structure of international relations.