JEDDAH, 30 October 2007 — Quite simply, whether or not the world will soon witness oil topping the $100 a barrel mark has become the burning question on the minds of government leaders, commodity experts and consumers worldwide.

And with prime factors such as ongoing geopolitical tensions mounting between Turkey and Kurdish rebels in Northern Iraq, the fresh US sanctions on Iran and wild cards such as the rapidly approaching winter in the Northern Hemisphere and the extent of the slowdown of the US and global economies, seeing the price of oil hitting $100 a barrel is becoming more and more possible, a number of leading experts said.

US light sweet crude jumped to a record new high $93.20 a barrel yesterday.

Dr. Mohamed A, Ramady, visiting associate professor, finance and economy at the King Fahd University of Petroleum and Minerals (KFUPM), told Arab News that he believes that $100 a barrel is possible but will be short-lived. When asked if numbers even above $100 a barrel were likely, he said “not unless a war broke out in the Mideast region, but for now I am forecasting only temporary spikes in the oil price which I believe will be dealt with as a major objective on the agenda of next month’s third OPEC Summit to be held in Riyadh.”

To make matters even more interesting, the US Federal Reserve is set to decide in a two-day meeting today and tomorrow, whether or not it will yet again cut interest rates than the already 50 basis points seen at it’s last meeting just last month. The decision came as a measure to deal with the slumping US housing market and as a cushion in efforts of avoiding a recession. Some have speculated that they expect the Federal Reserve to go ahead with the cut of possibly 25 basis points or more.

However, Ramady disagreed, saying “you have to look at the point that the US Federal Reserve has already taken a huge cut so I don’t really see them cutting interests rates again because I think that they would also like to see the markets adjust themselves to the recent changes in the global economy.”

In a press statement release earlier this month, OPEC Secretary General Abdalla Salem Al-Badri said “OPEC is carefully watching developments in the oil market and has observed with concern the recent escalation in oil prices. While the organization does not favor oil prices at this level, it strongly believes that fundamentals are not supporting current high prices and that the market is very well supplied.”

He said the OECD commercial inventory which remains above five-year levels standing at 53.5 days, is a “comfortable” level. Prices were most likely being driven by market speculators, persistent refinery bottlenecks and seasonal maintenance work while vowing to raise oil production by 500,000 b/d beginning Nov.1, he added.

Al-Badri further said “OPEC will continue to monitor the global oil market and will respond to any supply disruption, so as to ensure the market remains well supplied during winter months.”

Venezuela’s Oil Minister Rafael Ramirez was quoted as saying that a possible topic of next month’s OPEC summit would be the creation of a basket of currencies to peg the price of oil to rather than keeping oil prices sold by the US dollar which is being blamed for destabilization in the global oil market.

“I don’t think this will happen,” Dr. John Sfakianakis, chief economist, Saudi British Bank (SABB), said. “Sometimes oil ministers and other leading officials suggest measures that could possibly remedy the current dilemma of high oil prices but, if you look at the fact, only recently several GCC countries were under speculation to unpeg their currencies from the US dollar, yet all of them, excluding Kuwait, decided not to do. So I don’t actually see OPEC going ahead with this type of plan,” he said.

Leading experts and analysts decide to take a “wait-and-see” position. But one thing we can all be sure of is that the wait for oil at $100 a barrel certainly isn’t going to be a long one.

Oil jumped to a record high yesterday as stormy weather disrupted supplies from giant exporter Mexico and the dollar wallowed near record lows.

Mexican state oil company Pemex has shut a fifth of the nation’s crude production and halted the bulk of exports as storms kept ships bottled at ports across the country, a top US supplier.

US crude rose 73 cents to $92.59 a barrel by 1:15 p.m. EDT (1715 GMT), after striking a record $93.20. London Brent traded up 88 cents to $89.57 a barrel after hitting an all-time high $90 a barrel.

Central banks also have poured billions of dollars into financial markets to help ease the credit crisis, and much of that money has been invested in energy, commodities and emerging markets.

“There’s huge amount of speculation from hedge funds and others, they are all focused on the $100 barrel mark,” said Frances Hudson of Standard Life Investments.

“If volatility decreases significantly, they’d stop playing.”

OPEC has shrugged off calls from importer nations to raise crude output, blaming politics and speculation — not a supply shortfall — for high prices.

“I haven’t any signal that there is any shortage of crude... I believe a big portion of the oil price today is related to geopolitics and fear factors, and we cannot solve it,” Qatari Oil Minister Abdullah Al-Attiyah said.

“Sometimes there is a shortage of oil products but not of crude.

Consumers and producers should invest more in refining. We don’t have a magic stick to solve this.”