Oil hits $100/bbl; you can book a recession

Oil prices crashed through the huge symbolic barrier of $100/bbl today. As a result, the Dow fell below $13,000.

Several notes.

1. With this psychological barrier broken, oil stands a good chance of going up, especially going up a lot this summer.

2. This summer is when mortgage resets on adjustable-rate mortgages are set to peak.

3. Ergo, you can just write the word “recession” in on your summer 2008 calendar. Will political candidates be prepared?

4. Beyond that, the price ceiling breakthrough will open the door for Iran, Venezuela and other anti-American countries at the edge of OPEC to renew their calls for dual denomination of oil prices. The Saudis will continue to resist, worried about how much further the dollar, and all their American investments, will fall. Don’t be surprised if some of these members seriously look at going rogue and trying dual pricing on their own.

5. OK, the Kingdom of Saudi Arabia, more than ever, has to put up or shut up on claims it can crank out 12-13 million barrels of oil a day. Guess what? They’re going to have to shut up, or else spin. They can’t produce that much.