New oil shock ahead as $100 spike looms

The growing international crisis over Iran's nuclear programme could trigger a catastrophic oil price spike, sending crude prices over $100 a barrel, senior Wall Street analysts are warning.

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A single political shock could be enough to send oil markets into panic, said Adam Sieminski, senior energy economist at Deutsche Bank in New York. 'If we have one more big problem we are going to have triple-digit oil prices.' Sieminski points to confrontation with Iran, a worsening of the situation in Iraq or a recurrence of devastating hurricanes in the Gulf of Mexico as potential catalysts for a major rise.

Prices rose by as much as $1.20 in late trading on Friday after the United Nations inspector Mohamed El Baradei said Iran had not complied with demands to disclose the extent of its uranium enrichment programme. Iranian President Mahmoud Ahmadinejad later said he 'did not give a damn' about the UN's opinion.

In a report, Sieminski argues that with the world consuming some 85 million barrels of oil a day, a supply disruption of 2 million barrels a day (60 per cent of Iran's exports) 'can only be rebalanced through an extraordinary rise in prices.'

But he believes any breaching of the $100 level would be short-lived, and that prices would fall to between $30 and $60 as increased investment brings new production and refining capacity on stream in oil-producing nations.

(There is no "new production", because there is no "new investment", because there is nowhere to invest in.)

Crude hits new high on Bolivia worries

Brent crude oil touched yet another record high on Tuesday after Bolivia's decision to seize control of foreign-owned gas fields added to market concerns about disruptions to global supplies.

IPE June Brent peaked at $74.97 a barrel while Nymex June West Texas Intermediate hit $74.89. West Texas hit its record high of $75.35 a barrel in April.

Saudi Arabia's oil minister warned that further terrorist attacks on the country's oil facilities were likely but that the world's largest producer was committed to ensuring 1.5m to 2m barrels a day of spare capacity.

This move to calm fears over the market's ability to cope with any further supply squeeze contradicted earlier comments from Iran's deputy oil minister.

He warned that crude could reach $100 a barrel as supplies could not be increased in the short term, raising the pressure in the stand-off with the West over Iran's nuclear ambitions.

I think my question is - what will be the title of my next countdown series? Countdown to $200, $500, or $1,000 oil?

In the long run, we're all dead. John Maynard Keynes