The price of oil is creeping back up again, hitting $44 today at NYMEX. Deutsche Bank is warning that it could go as high as $100/barrel.

http://business.scotsman.com/index.cfm?id=887522004

What's interesting about this increase is that it doesn't seem to be based as much on fear and speculation. It's driven more now by the basic supply/demand situation. Factors include the capacity of the exporters and the size of the proven oil reserves. There's still a fear element, of course, but it's not so much terrorism that they're afraid of now as they are about the "big turnover" point where capacity exceeds supply, and other possible scenarios.

Prices could still come down as new capacity comes online, but it's going to be an interesting remainder of the year for the oil industry.

This was merely a eventuality...stagflation? Supply shocks? Who knows...

Nobody. But I do disagree with Pangloss because gripping but unpublicized fear is evident, a powerful fear that simultaneous petroleum supply interruptions could suddenly cripple world economies. There is also a realization of significantly increasing risk of simultaneous and even sustained interruptions in Arabian and Arabian Gulf oil at any time. The US Govt is hastening to fill her Strategic Petroleum Reserves, while murmuring "don't worry everyone, it's all under control". Every slight blip is now being exaggerated in the markets, and that spells Fear.

I expect the oil industry to come out with larger profits. PLus supply problems are the other difficulty. if Iraq could be brought back to full operation I suppose there wouldnt be much trouble.
What I find interesting is how much more oil is likely to come online? I mean the SAudis are already pumping as much/ as fast as they can, and I havnt read anything about other countries having massive overcapacity, so where is the necessary increase in supply going to come from? China will continue to increase its use for the foreseeable future, its coming up to Winter in the USA etc, and I see no slow down in demand for oil for years. So, we're buggered. ;)

Pangloss, are you scottish?

Finally, if I were an international terrorist mastermind, I would be hijacking oil and LPG tankers. The naval security community is aware of the dangers and cant relaly think of any way of stopping them.

The world supply of oil will be greatly disrupted if a terrorist attack were to take place in Saudi Arabia. The terrorists in that country have already tried to attack pipelines and I even think terminals. OPEC today provides only 30% of the world’s oil compared to 50% in the 70’s. But I fear inflation is back on the way, I don’t see the price of oil actually going down any time soon. Especially with China’s insatiable demand that would very easily match of the US:

China was the world's second largest consumer of petroleum products in 2003, surpassing Japan for the first time, with total demand of 5.56 million barrels per day (bbl/d). China's oil demand is projected by EIA to reach 12.8 million bbl/d by 2025, with net imports of 9.4 million bbl/d. As the source of around 40% of world oil demand growth over the past four years, Chinese oil demand already is a very significant factor in world oil markets.

This is really crunch time the US and other developed states have to really start investing the alternative energy sources because oil is going to become a rare commodity and the world economy runs on it.

Here is an economist article on the oil situation:

Not only has Iraq’s oil industry, hampered by creaking infrastructure and sabotage, been unable to pump anything like its potential capacity, but supply elsewhere is under pressure too. Last week, it appeared that Yukos, Russia’s biggest oil producer, might be forced to stop production, as part of its ongoing battle with the country’s tax authorities. That fear proved unfounded, but oil traders remain nervous about the capriciousness of the Russian state.
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Purnomo Yusgiantoro, president of OPEC and Indonesia’s oil minister, stunned observers by saying that the cartel would be unable to pump any more oil to alleviate the pressure on prices. “The oil price is very high, it’s crazy,” he said, adding that “there is no additional supply.”
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However, he contradicted that statement the next day (most likely after coming under pressure from Saudi Arabia, the leading member of OPEC), claiming that the cartel has around 1m to 1.5m barrels per day (bpd) of spare capacity that it could tap immediately. This, combined with a surprise increase in American gasoline stocks and news that Russian bailiffs would allow Yukos access to its bank accounts to pay workers, helped bring the oil price down by around a dollar. But seasoned observers remain sceptical about OPEC's ability to pump any more oil.
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America’s stockmarkets, which were already worrying about America’s flagging economic performance—GDP growth slowed to a lower-than-expected 3% in the second quarter, on an annual basis. Alan Greenspan, chairman of the Federal Reserve, has said the high oil price is partly to blame for weakening consumer spending, which fell by 0.7% in June. Dresdner Kleinwort Wasserstein, an investment bank, reckons that half a percentage point could be knocked off American growth in 2006, and 0.7 added to the inflation rate, if oil remains above
$40 a barrel.
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But now it is OPEC’s ability to open the taps further that is in doubt—and at a time when the antics of Russian prosecutors are also raising questions about supply from that country. OPEC’s spare capacity is now thought to be 1-2% of global demand, well under the 4% that is thought necessary in order to influence prices. That gap cannot be closed quickly, since the oil-production business has long lead times and any new oil will take a couple of years at least to come on stream. In his comments on Tuesday, Mr Yusgiantoro hinted that that went for Saudi Arabia as well as the rest of OPEC
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Saudi production in July was 9.25m bpd, well above its 8.45m quota, but below its 10.5m official capacity.
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In addition to OPEC’s attempts to increase supply, the International Energy Agency also expects non-members to boost output by a combined 1.2m bpd over the coming year, of which around half will be from the former Soviet Union. But that figure is hostage to events in Russia. At 1.7m bpd (more than is pumped from all of Libya’s wells), Yukos’s output makes up 2% of global oil production and thus has a noticeable effect on the price. With Russian officials now attempting to sell the company’s prize subsidiary, Yukanskneftegaz, oil traders are likely to remain jittery
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the world may just have to get used to oil of $40 or more a barrel.

It has to get ready for steadily increasing prices and not so steady demands shifts upward to unsustainable levels. I did the math myself and with current levels of consumption the world’s current supply of oil is only 37 years! Demand is not going down, so one can accurately state that it will be really much less then 37 years. You can do the math yourself: http://www.cia.gov/cia/publications/factbook/geos/xx.html#Econ.

For china it would become increasingly harder to flood the us amrket with cheap products if the cost for producing these articles goes up? Also at 100 dollars a barrel it will be profitable again to explore the smaller fields in the north sea for example, so I think of it more as an economical problem than a true resource shortage.