Last year’s predictions by “experts” of a $100 barrel had us skeptical. More hype than sound analysis, we thought. Boy, were we wrong. Oil surged to a record of more than $117 a barrel last Monday due to a pessimistic outlook about supplies from Saudi Arabia and an attack by militants on the Nigerian pipeline. More from the Financial Times:

Nymex May West Texas Intermediate hit a record $117.60 a barrel, but profit taking later dragged WTI down 50 cents to $116.19 while ICE June Brent lost 48 cents at $113.44 a barrel after touching a fresh peak of $114.86. The outlook for long-term supplies darkened as Saudi Arabia confirmed it would put on hold any further capacity expansion plans, beyond the 12.5m b/d target the kingdom is expected to reach by next year.

Even more disturbing was the International Monetary Fund’s warning that commodity prices, especially those for food and energy, had reached levels where they risked becoming a destabilizing force in the global economy. Sure, we can cheer commodity returns in our investment holdings, but much larger — and darker — issues are at stake.

Read more at www.ft.com.