THE US$100-a-barrel oil that Goldman Sachs said would prevail by 2009 may be only months away. Jeffrey Currie, a London-based commodity analyst at the world’s biggest securities firm, says $95 crude is likely this year unless OPEC unexpectedly increases production, and declining inventories are raising the chances for $100 oil.

“We’re only a headline of significance away from $100 oil,” said John Kilduff, an analyst in the New York office of futures broker Man Financial Inc. “The unrelenting pressure of increased demand has left the market a coiled spring.”
New disruptions of Nigerian or Iraqi supplies, or any military strike against Iran, might trigger the rise, Mr Kilduff said.

Higher prices will increase revenue for energy producers from Exxon Mobil to PetroChina, while eroding profit at airlines and railways. The US and other oil-importing nations risk accelerating inflation, while higher energy costs threaten to restrain growth.

Benchmark crude oil futures ended last week at $78 a barrel on the New York Mercantile Exchange, up 51 percent since mid-January and twice the level of early 2003. 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, only pay off should oil go above the target price.

The Organisation of Petroleum Exporting Countries is scheduled to next meet in September. A decision to raise output at that time would lead to greater supplies towards the end of the year.

Meanwhile, despite four years of high prices and increasingly dire warnings about climate change, a new report is predicting that world oil demand will rise faster than previously expected over the next five years while production slips, threatening a supply crunch.

“Demand is growing and as people become accustomed to higher prices they are starting to return to their previous trends of high consumption,” said Lawrence Eagles, the head of oil markets analysis at the Paris-based International Energy Agency.

“It’s important that we have more investment and a greater emphasis on energy efficiency.”

The pressures on fuel supplies are growing because booming Asian economies are using more fuel to power their prospering manufacturing industries and to supply growing numbers of automobiles amid a spurt in consumerism.

Rapid growth of the petrochemicals sector and low-cost airlines are other important factors lifting demand.

– Bloomberg and The International Herald Tribune