In September 1992, George Soros became globally famous when he shorted the pound, eventually forcing the Bank of England to pull it out of the European Exchange Rate Mechanism and devalue. The man who "broke the Bank of England" earned a whopping $1.1 billion in the process. It almost looks as if a similar thing is happening with OPEC and the price of oil. As oil continues its seemingly inexorable march toward $100 a barrel or higher, there's all sort of market chatter about whether the Persian Gulf states should dramatically ramp up production to pull the price back to earth. Now while I have little doubt that fears of military strikes against Iran are being reflected in the price, I also have to wonder if the rise also reflects a bet by speculators against Saudi Arabia being able to really open the taps. My personal experiences show that the "peak oil" folks seem to be slowly gaining converts on Wall Street.
Reader Comments