Oil Prices hit $100/barrel

Many people laughed at the $100 forecast per barrel for crude only a few years ago. Yesterday that price became a reality.

What is the impact for investors?

Firstly what has brought the price to this point- many economic and political factors have had a bearing, lack of investment in refining and production, the dollar position and the importance of hedge fund commodity dealing.

Fundamentally supply and demand is a important consideration, world oil consumption in 2004 to 2.7m barrels per day- this has been seen by some commentators as the tipping point. There is also a generally held view that OPEC is running out of spare capacity

So, how much should investors worry? There is no doubt that this will be a major factor in world economic conditions- many investors will recall the impact of the last period of high oil prices in the 1970’s .

Prices will no doubt be pushed up as suppliers pass on the costs to consumers.

In Euroland and the UK much of the impact is yet to be felt because the pricing of oil is in dollars

This represents opportunities to invest in the sector but investors should have a careful eye to the cost side of these businesses.

There are many smaller energy companies that have seen significant upswings in their price, but investors should look to larger integrated companies too. Eggs and Baskets- as always!