Indeed, historically, crude oil pricing has very to do with supply and demand mechanisms, but tends to be driven by political agendas, or plain old crowd hysteria in the trading markets.
The OPEC cartel has traditionally adjusted preferred oil pricing by threatened supply cuts (which are generally ignored by all OPEC members), and Saudi has used oil pricing as a strategic weapon (witness the 1970's oil squeeze). Check out "Foreign Affairs", March-April 2002, for some very good articles on the dynamics of oil pricing and production.
For a deeper look at the oil industry I recommend the controversial book "Hubbert's Peak" by Kenneth Deffeyes. He details the fact that oil prices are more a political dynamic rather than pure supply and demand. However, he does assert that oil prices will continue to rise due to the unrecognised fact that oil production will peak in the period 2004-2008 (based on the precedent that M. King Hubbert correctly predicted the peak in U.S oil production would occur in the early 1970's; first forecast, I might add, in 1956!).
Regarding the state of oil prices today, they have been driven up by a confluence of events with the impending war in Iraq, being compunded with significant political events in Venezuela. The combination of both has severely rocked confidence in hopes of cheap oil in the near future, and the result is a futures market driven rocketing price. Should the war get underway, the educated bet is a short spike in prices, followed by retracement as confidence returns to the markets. However, should George get bogged down in Iraq, the bet is a sustained price of $50.00 until the cessation of hostilities.