Oil bubble?

It's getting fashionable to call everything a bubble.

Asia Pacific: Bubble Fight - Oil vs. Property
Andy Xie (Hong Kong)
The global economy has experienced Japan’s property bubble in 1980s, the investment bubble in Southeast Asia in the 1990s, the IT bubble between the Asian Financial Crisis and 2000, and a global property bubble since. The demand impact from the property bubble has created an oil bubble. The oil bubble, however, is different from previous bubbles. It creates inflation and forces central banks to raise interest rates. That could deflate the property bubble, which would in turn kill the oil bubble also. If the global property bubble deflates in an environment of rising interest rates, it will likely lead to a global recession. I put the odds for such a scenario at 30% for the second half of 2005.

While I wouldn't go so far as to describe oil as a bubble, there is no doubt that speculative activity is responsible for at least some of the price increase.

And of course, all the bubbles could deflate if interest rates keep rising.

See also:

Global: Geology, Statistics, and Economics: What Are Markets Saying About Oil?

Global: Geology, Statistics, and Economics -- What Are Markets Saying About Oil? (Part II)