The International Energy Agency is urging OPEC to boost production, with IEA executive director Nobuo Tanaka at the World Economic Forum in Davos calling global supplies "very tight." Oil ministers from Iraq and Qatar at Davos were noncommittal, saying the decision would be made at the OPEC summit in Vienna next month. (Bloomberg, Jan. 25) Speaking in Caracas, price-hawk Venezuela's oil minister Rafael Ramirez rejected calls for boosting output, but said the "possible impact on the energy market" of a US economic downturn would be considered at Vienna. (Reuters, Jan. 25) President Hugo Chávez, sounding unusually conciliatory, said the price "is there, close to 100 dollars, hopefully it won't keep going up, hopefully it will stabilize." Prices reached $100 a barrel earlier this month, and now hover at around $90. (Reuters, Jan. 25) On Jan. 7, when prices hit $100, Bloomberg wrote: "The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year."

Options to buy oil for $200 on the New York Mercantile Exchange rose 10-fold in the past two months to 5,533 contracts, a record increase for any similar period. The contracts, the cheapest way to speculate in energy markets, appreciated 36 percent since early December as crude futures reached a record $100.09 on Jan. 3.

Analysts say the economic slowdown could mean dropping prices, but Bloomberg recalled:

While $200 may remain an outside chance, [Matthew R.] Simmons at [Houston investment bank] Simmons & Co. showed he's willing to make that bet. He wagered $5,000 with New York Times columnist John Tierney in August 2005 that oil would average at least $200 a barrel in 2010.

As we noted when Simmons and Tierney made their bet, the real issue was whether prices would hit the triple digits. They settled on 2010 because Tierney assumed it would take five years, not three; and on $200 to adjust for inflation. So even if he happens to win his wager (more likely due to global recession—or worse—than the "cornucopian" genius of capitalism), his basic thesis has already been revealed as flawed at best. Not that we expect him to eat his crow like a big boy.

Our last post on the global struggle for control of oil.