Billionaire investor George Soros said that although the price of oil is rising due to a combination of rise in demand from China, a weakening dollar and the reduction in supply from the Persian Gulf nations, the main reason for the unprecedented spurt in crude price is speculation.
In an interview with The Daily Telegraph, Soros said that the oil market has been flush with billions of dollars as speculators pour money into oil, thus inflating the price of crude oil to unmanageable levels. He said that such a scenario will lead to the 'oil market bubble' bursting over time.
Soros said that the recession facing the United States and the United Kingdom is the 'most serious of our times' and will causae more pain than ever before.
He said the oil bubble will burst only after both the nations (the US and the UK) slip into full-blown recession.
He said that once the two economies are deep into recession, the demand for oil will fall thus making oil cheaper in the international market.
The gloom and doom comments by Soros, one of the world's biggest hedge fund managers) follow the record highs that oil prices soared to ($135 per barrel) on May 22, with analysts predicting that the prices may soon touch $150.
His statement is significant as many oil sector analysts had said that speculation is only one of the many reasons for the increase in oil prices.
George Soros. | Photograph: Roslan Rahman/AFP/Getty Images
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