IEA: another crunch is coming

17/02/2009

Crude oil prices may surge upwards in 2010 as global demand picks up, the International Energy Agency (IEA) has warned.

According to the France-based group, there is a significant risk that the recent supply cuts brought into force by the Organisation of the Petroleum Exporting Countries (Opec) will create a substantial shortfall in crude availability once the global economy begins to recover and demand for crude, DERV, heating oil and other derivatives increases.

Speaking in London, Nobuo Tanaka, chief executive of the organisation, warned that while demand is highly subdued at the moment, production needs to be maintained in order to support consumption requirements in 2010 and beyond.

"When the economy starts growing, recovery comes again in 2010 and then onward, we may have another serious supply crunch if capital investment is not coming," Mr Tanaka warned.

Such a scenario could lead to a dramatic rise in the price of distillates such as heating oil, DERV, farm diesel and bunker fuel, all of which rose significantly last year as crude prices hit $147 a barrel on July 11th.