I think James Picerno at the Capital Spectator finds the bullseye.
The situation is precarious in the short run if only because the world economy remains increasingly dependent on the likes of Nigeria, Iraq, Venezuela, Russia and Iran for crude. Stability and political calm don't necessarily come to mind when such names pass one's lips. That's old news, of course, but the dependence on those countries takes on a new twist as the world's spare oil production capacity recedes to nail-biting levels. Opec's spare capacity, most of which resides in Saudi Arabia, has dropped to an optimistic estimate of 1.6 million barrels a day, according to the Energy Information Administration. That's cutting it close, considering that global oil consumption was recently running at 83 million barrels a day, by one estimate. That puts Opec's spare capacity at under 2%.
Read the whole thing.
UPDATE: Wander over to Angry Bear and take a look at Kash's post as well. Here's the gist:
From the consumer's point of view, oil is now more expensive than it was in the wake of the first oil shock. From the point of view of businesses, oil is now more expensive than at any time except for the period immediately after the second oil shock, 1980-82. Another $10 rise in the price of oil and it will be near its all-time highs in real terms.
Given these very high real prices for oil, I think that it is certain that these prices will have noticeable effects on economic activity..
I hope he's wrong, but I would not be inclined to argue.