The Associated Press

May 26, 2008 at 8:12 AM EDT

LONDON — Soaring oil prices are increasingly the result of speculation, financier George Soros said in an interview published Monday.

The billionaire investor said the money pouring into the oil market has the look of a bubble, but it would not burst until both the United States and Britain are knocked into a recession.

“Speculation … is increasingly affecting the price,” Mr. Soros told the Daily Telegraph.

“The price has this parabolic shape that is characteristic of bubbles.”

But the cost of oil — which briefly reached new high of more than $135 (U.S.) a barrel Thursday — is unlikely to fall dramatically until the U.S. and British economies begin contracting, the paper quoted Mr. Soros as saying.

Mr. Soros has frequently been a voice of gloom as the U.S. economy slows amid a wrenching housing crisis and tightening credit. But pessimism hasn’t stopped his fund from making money.

According to Institutional Investor’s Alpha Magazine, the Quantum Endowment Fund, which Mr. Soros created but no longer manages, made $2.9-billion last year with returns of over 30 per cent.

Tags: peak oil energy investments

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