The oil price is simply too high. At these levels, the advanced economies are going to start to slow down after a period. As to the developing world, they will probably resort to labour-intensive methods and use donkey carts. The high oil price is simply sucking money out of all the economies and into the oil producing world.
If airlines go bust, manufacturing slows down, people start to abandon their car-use, that will start to create demand-destruction for the oil market, and then the pain will transfer everywhere.
As the whole world has been through the longest recession after oil was above $100 a bbl for a sustained period of 3 months and peaked at $147, I would suggest a sane policy of co-operation so that such a scenario is not revisited.
Oil from $125 Brent Crude and $105 WTI needs to head south.
A lower oil price where the whole world can continue their economic activities without too much strain would, paradoxically, auger well for world peace as well.
I look forward to your views.
Durudarshan - Investment Analysis