INTERNATIONAL. Nouriel Roubini, a professor at the Stern Business School at New York University and chairman of Roubini Global Economics (RGE), who predicted the current financial crisis more than two years ago, said oil's jump to US$80 a barrel is unjustified and that a run to US$100 may cause economic stress the way record highs near US$150 did last year.

Speaking on Wednesday at a commodities conference in New York, Roubini said:  "Part of the rise may be justified by global economic recovery...but going from US$30 to US$80 when demand for oil is down to 2005 levels is very difficult to justify".

"If oil goes to US$100 today, it will have the same effect on the global economy as what US$147 oil had last year,' said Roubini, referring to the price oil stood at before the US financial crisis escalated into a global recession in 2008.

Oil prices fell Friday to US$77.43 a barrel on the New York Mercantile Exchange, after the government said the US unemployment rate topped 10% for the first time since 1983.

Oil's latest rally has been fueled largely by a weak dollar even as crude inventories stand near multi-year highs in the United States, the world's No.1 energy consumer.

Roubini has argued in his writings that the near-zero US interest rates had led to a massive dollar-selling and other asset buying which had created new investment bubbles that could not be economically sustained.

"The combined effect of the Fed policy of a zero Fed funds rate, quantitative easing and massive purchase of long-term debt instruments is seemingly making the world safe – for now – for the mother of all carry trades and mother of all highly leveraged global asset bubbles," Roubini wrote in a Financial Times editorial earlier this week.

"This unraveling may not occur for a while, as easy money and excessive global liquidity can push asset prices higher for a while. But the longer and bigger the carry trades and the larger the asset bubble, the bigger will be the ensuing asset bubble crash," he added.

Roubini told the commodities conference, "the price increase we have seen is too much, too fast," adding "think what happened to oil last year. It went up not because of fundamental reasons like demand but because of a bubble."

"Today, we have new bubbles because of a wall of liquidity created by the massive dollar carry trade," Roubini said, referring to investors' use of a weak dollar to buy high-yielding assets -- a practice he said had made almost every trader 'look like a genius'.

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