The Telegraph: King Abdullah of Saudi Arabia visits Britain - Oil is king but for how much longer? -
King Abdullah of Saudi Arabia, the "Capi Di Tutti Capi" of the Oil Emporium" visits Britain
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King Abdullah of Saudi Arabia visits Britain - Oil is king but for how much longer? -
>Some of the Oil industry's biggest hitters made their way to Buckingham Palace last Tuesday. The occasion: a state banquet in honor of King Abdullah of Saudi Arabia.On the royal guest list were Jeroen van der Veer, the chief executive of oil giant Royal Dutch Shell, Sir Michael Bishop of BMI and Dick Olver of BAE Systems, the defence giant. Business was off the agenda but the first state visit to Britain by a Saudi monarch in two decades was fortuitously timed. King Abdullah couldn't have asked for a better way to remind the western world of his country's importance than last week's record oil price. Daniel Yergin, an industry veteran and the chairman of Cambridge Energy Research Associates, agrees. "Oil prices are becoming increasingly decoupled from the fundamentals of supply and demand," he told a conference last week. "With prices over $90 a barrel and strong anticipation of $100, the oil market is showing signs of high fever, stoked by fears of clashes in the Middle East and resulting disruptions of supply. A weakening dollar and anticipation of further weakness add further fuel to the fever."
With western Europe about to head into the winter months, the supply situation could get worse before it gets better – which could propel the price of oil past the magical $100 mark.The voracious appetite of emerging countries, in particular China, has been the main driver behind the huge surge in demand. The Organisation for Economic Co-operation & Development (OECD), for example, estimates that China contributed more than 24 per cent of additional oil demand between 1995 and 2004. There is a growing consensus, however, that by next spring prices will be on a downward trend. Goldman Sachs, which has been the most bullish Wall Street investment bank on the commodity, last week recommended clients to take profits, predicting that the price of oil could fall back to $80 a barrel by next April – although it admitted that, until then, anything could happen. Says Oppenheimer's Gheit: "It's a bubble. The $64,000 question is, when will the bubble burst?"
Labels: Britain, EU, Oil, Saudi Arabia, World Economy
