Oil prices briefly hit $100 a barrel today. Al-Jazeera notes that this nears the record of $101.70 in 1980 when the Iran-Iraq war broke out. Today, other factors, such as geopolitical turmoil, tight stockpiles, and a weak dollar triggered speculative buying, leading to the spike.
$100 oil yields another windfall for Saudi Arabia. But, as I wrote in National Review online, the Saudis continue to squander their spoils.
$100 oil also benefits Iran. But, as Gul Luft noted in the July inFocus Quarterly, Iran’s oil infrastructure “is neglected, crumbling and underinvested. Many of its oil and gas fields are in dire need of foreign technical expertise…” Thus, the spike will only benefit Iran for the short run.
The question now: how will this oil spike impact the U.S. economy?