Milan (AsiaNews) – Capital movements on commodity exchanges, not low supply are pushing oil prices upward. Brent crude has reached US$ 74 a barrel because of lowered refinery use and a backup in crude inventories that has left many a super tanker waiting to unload. Oil storage ahs become a problem since facilities are full in the Persian Gulf, Europe, the Americas and even Asia. Even Israel, which built huge embargo-busting oil depots to allow the country to survive every contingency, cannot store more oil. The same is true for South Africa which inherited vast oil storing facilities from its former apartheid regime and now readily leases out its terminals in Saldanha Bay through its national oil company PetroSa. 

Yet, if US summer demand for gasoline and energy thirst in Asia, especially in China, are likely to punch a hole in supplies, why are large quantities of oil going unsold or not being stored, and prices not dropping? Oil prices are rising because investment funds are pouring liquidity into commodity exchanges trading in oil. This vast flow of capital needs an explanation. There are in fact three possible reasons to account for the situation.

First, it might be a speculative surge that will quickly drop. Secondly, it could be that some financial circles have insider information concerning US government intentions and military options towards Iran—this might explain rising gold prices now at US$ 640 per ounce. Thirdly, it might finally be that many financial groups are investing in commodities like oil to cushion themselves against a possible, 1929-like meltdown of the international financial system. Symptomatic of the danger is the dismal state of General Motors, the major US carmaker, and the potential impact on US financial institutions of further interest rate hikes.