In 2005, Goldman Sachs oil analyst Arjun Murti wrote of an oil “super spike”, with prices reaching $200 a barrel. Murti was amazingly prophetic with that call, as oil topped $147 a barrel in 2008 and would likely have made his predicted $200 had the general economy not suffered an historic meltdown.
Now I am seeing another opportunity for $200 oil, even though the current oil market looks more ready to drop to $75 first. It might do that, but then I can see the coming of the next major oil “spike” – and I’m also looking for at least a $150 target.
What inspired the first ‘super spike’ in 2008 was both fundamental – the new appetite for energy from the emerging markets of China and India, but moreover financial – the new drive for investment in oil, a phenomenon I outlined in my book “Oil’s Endless Bid”.
What will inspire this next one is somewhat different. Let’s take 2007. EM countries did create a rapidly increasing demand for oil barrels. But what we also even more significantly had was a rapidly expanding demand for financial oil barrels -- for investment – that I posited entirely outraced the fundamentals.
Today, we have global energy demand that similarly continues to increase, but it is accompanied by a global risk of supply disruption greater than any I have ever seen in 25 years – and an almost certain…