(Xinhua)
Updated: 2007-12-10 10:27

Addison Armstrong, director of market research at the brokerage Tradition Energy Futures, said speculative money might be tacking on just 5 dollars or 10 dollars to the price of a barrel.

According to a CNN report, Goldman Sachs has over 80 billion dollars in the oil market, while Morgan Stanley has reportedly bought facilities to store oil. Hedge funds, pension funds, commodity-centered mutual funds and insurance companies -- all have gotten in on the act.

Market analysts said other factors contributing to a doubling in oil prices -- from 50 dollars at the beginning of the year to almost 100 dollars in November -- include geopolitical uncertainties, natural disasters, change in oil inventories, especially those in the United States, the inability to immediately produce much more oil in the OPEC countries and a lack of refining capacity.

Of them, political tensions in the Middle East merit special attention.

Oil prices in 10 out of 23 trading days in October were either directly or indirectly affected by the situation in the Middle East, which has more than 60 percent of the verified oil reserves of the world.

HIGH OIL PRICES TO HURT WORLD ECONOMY

Some analysts believe that the soaring oil prices have a knock-on effect on the whole economy -- from a commercial side, the production costs of electricity rise, which raises manufacturing costs. From a consumer side, the price of petrol for cars and other vehicles rises, leading to reduced consumer confidence and spending.

According to a Wall Street Journal report, oil prices will have a severe negative impact on the world economy if they remain high for a relatively longer period.

High oil prices will have a much more serious impact on emerging economies than developed countries, the report said, adding many countries have raised or will raise the retail prices of fuel oil, which will help alleviate the financial burden of these countries and restrain oil consumption. On the other hand, an oil price hike will increase the burden of both businesses and households and the risk of inflation as well.

Tchilinguirian said the impact on the emerging markets of the non-OECD (Organization for Economic Co-operation and Development) nations such as China, India and the Middle East will be strong and energy intensive GDP growth.

   1 2 3   

   1 2 3