Current oil prices will put the US back into recession by year's end, and a global oil crisis will break out in 4-5 years. This gloomy forecast comes from Yossi Hollander, chairman of the Israeli Institute for Economic Planning. In an interview with "Globes" in advance of a session of the Herzliya Conference on rising oil prices, he explains what he believes will happen in the coming years, and why Israel has an opportunity to make large gains.
The session at the Herzliya Conference is against the backdrop of oil crossing the $100 a barrel threshold, and a forecast by the International Energy Agency published three months ago, that the price per barrel will reach $200 in 2035.
Yossi Hollander noted: "In the longer term of the next 4-5 years, a global oil crisis is expected. It will begin in less stable places. China will know how to take care of itself; it has $2 trillion. But countries without the economic ability to buy oil, or the military capability to take over oil supplies, will simply remain without oil. African countries like Kenya, which a year ago spent 150% of its trade deficit on petroleum procurement, will drop out of the market completely. In this situation, there is no fuel for transportation, no fertilizers, and no pesticides. People will die of hunger, because the land cannot sustain them all."
"They say that the rise in food prices in Egypt was the straw that broke the camel's back. There is an absolute correlation between the price of food and the price of oil. Not long ago, it was reported that countries like Saudi Arabia were stockpiling food so that it would not happen to them. The Saudis are buying sugar to raise the price of ethanol, which is an alternative to oil. China is building strategic oil stock stocks, and according to estimates, one third of the increase in oil demand in China was for this purpose", said Yossi Hollander
For more: "Oil price will put US back in recession" - Globes
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