Saudi Arabia’s Sheikh Ahmed Zaki Yamani — the face of the OPEC oil cartel during the 1970s oil price shocks — says this time it is big-money speculators to blame for surging prices and confidently predicts the scare will not last.

The former Saudi oil minister said consumers all over the world were suffering the fallout of a buying bonanza by hedge funds, who for the moment see the energy market as the best place to make a fast return.

By contrast, OPEC is doing its best to get prices down as it frets that spiraling energy costs could hurt global growth, Yamani said.

“The funds are injecting a huge amount of money. The world economy — in China, Japan, the Third World, even America — is paying the price. It is a bad thing,” he told Reuters in an interview.

The fund influx has pushed world oil prices up to more than $40 a barrel, matching the very highest levels hit during Yamani’s renowned stint as Saudi oil minister from 1962 to 1986.

Then Yamani became a household name as the Organization of the Petroleum Exporting Countries’ demonstration of Arab oil power shook up the world economic order.

Yamani does not expect today’s prices — which, when adjusted for inflation, are still only just over half peaks struck in the early eighties — to go much higher.

He expects OPEC to calm prices by squeezing out more supply, despite market fears that the cartel is now at its limit as it pumps at its fastest level since Yamani’s days.

“Prices are already too high. There is additional supply available from OPEC — you will definitely see it,” he said.

Saudi Arabia has at least one million barrels per day of spare capacity above its current production of around 9.5 million bpd, giving the world supply system some slack, he said.

“Before the end of this summer we will see a lower price. Saudi Arabia has the key to do this,” he said.

Yamani sees parallels in today’s price scare with his era’s two oil shocks — in the 1973 Arab oil embargo and after the 1979 Iranian revolution — which each time sent the global economy spinning into recession.

Now, as then, politics is inextricably entwined with oil, he said. “It was artificially done by OPEC in the 1970s and early 1980s,” he said.

“And now also you see political factors: the Iraqi occupation, the Venezuelan referendum, tribal disputes in Nigeria and now the Russian company Yukos,” he said. “This panic is being used by the speculators.”

The array of uncertainties this week pushed oil prices to fresh highs after rising a third this year as China’s economic expansion leaves the world supply system too stretched to cope with even modest disruption.

Speculators have bet it will take several years to fix the problem by generating enough new supply — and that political tensions in big producers will keep a question mark hanging over existing oil flows.

But Yamani has long believed that if producers let oil prices go too high they sow the seeds of their own destruction by encouraging development of higher-cost supply, suppressing demand and breeding new fuel technologies.

Nothing in today’s price surge has changed his view. He foresees a rerun of the mid-eighties crash, when a glut of OPEC oil halved crude prices in the space of a year — an episode that ultimately forced Yamani out of office.

“What happened in the eighties will be repeated some time later this decade. It’s ABC economics.”

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