Oil Might Hit $80 By December
Continued worries about international tensions and insatiable consumer demand drive options higher.
Option contracts on the New York Mercantile Exchange show outstanding offers to buy crude oil at $80 USD per barrel for December delivery.
Oil prices reached a record of $60.95 on June 27th, a figure that might be viewed with nostalgic fondness by the time the last month of the year arrives. OPEC has already increased its production to try and meet peak usage in the winter months, but their efforts have had no effect on pricing.
Fear keeps driving prices upward. “The perception is that the risk of higher prices now is higher than at the beginning of this year,” Deutsche Bank strategist Adam Sieminski said in a Bloomberg interview. “The market is so tightly balanced that issues like a nuclear confrontation with Iran could add a great deal of worry.”
Even worse, a supply disruption could blast oil prices past three digits. An economist at Goldman Sachs said in June that $105 a barrel could be the result of actions causing a drop of a couple of million barrels a day.
Already, London’s markets have seen price requests for $100 option contracts. There and in other world markets, analysts have concerns that an American exit strategy from Iraq might have them moving through Iran to settle a now-simmering nuclear tension.
“Prices would shoot up, and then forget about $60,” said Sheikh Zaki Yamani at the conference of the Center for Global Energy Studies of a possible US strike against Iran.
David Utter is a staff writer for WebProNews covering technology and business. Email him here.