World begins to smart from oil's too rapid rise

By Barbara Lewis and Peg Mackey - Analysis

LONDON (Reuters) - From the poorest of Africa to the United States and big business, a breakneck rally that could take oil to $200 a barrel is likely to inflict pain on everyone.

The world was remarkably resilient to a series of record prices in 2007, but a roughly 30 percent rise since the end of last year, with predictions of more to come, is harder to absorb.

"The key issue is the rate of change. The recent exponential rise is unhealthy for everyone," a senior executive from a major oil company said. He declined to be named.

On the first trading day of 2008, oil prices hit the $100 a barrel level, which once seemed unimaginable.

The price topped $125 a barrel on Friday, making a rise to $150 probable and to $200 possible, according to OPEC ministers and investment bankers alike.

"If current conditions continue, reaching a period when oil is supplied at $200 a barrel is not out of reach," Iran's Oil Minister Oil Minister Gholamhossein Nozari said this week.

Investment bank Goldman Sachs said the possibility of $150-$200 a barrel over the next six-to-24 months was "increasingly likely." The bank was one of the first to point to a triple-digit oil price more than two years ago.

Oil at $200 a barrel would mean roughly $6.50 a gallon for U.S. gasoline, according to figures from Standard Life. It makes the record $3.61 U.S. consumers are now paying seem cheap.  Continued...