Fasten your seat belts, we’re on a bumpy and expensive ride as oil experienced one of its most volatile weeks ever. Prices hit new records daily, they reach $135 a barrel on Thursday, then fell more than $4 before rebounding on Friday.
The cost of oil has doubled in the past year, driven up by supply worries – based on stagnating output from Russia and other non-OPEC producers – and the weakening dollar which led investors to use oil as a hedge against the falling currency.
For the producers that is a bonanza; the OPEC countries, which supply more than a third of the world’s oil, pumped 450 billion euros worth in 2007. At last year’s prices it made 42 million euros every hour. The world spent 180 million euros each hour to buy the oil it needed.
The US remains the world’s biggest consumer and keeps asking producers to pump more. Venezuela is an OPEC member and its anti-American president, Hugo Chavez, is reaping the benefits of high prices and railing against the US. Chavez said: “They say we are to blame for the price of oil. They are the ones to blame in the first place, for their wastefulness, their consumption. It’s not OPEC. They want to demonise OPEC before the world. They want to turn the world against OPEC.”
Chavez spoke after meeting OPEC’s Secretary General Abdala El-Badri who was visiting Latin America and who again blamed price rise on geopolitical tensions, speculation and the weak US dollar.
And the weather has been added to that mix as the US national Oceanic and Atmospheric Administration this week forecast that this year’s hurricane season may be more active than usual threatening the main US producing and refining region, the Gulf of Mexico.