Oil Prices Up as Supply Shortage Looms

Oil prices have risen after the International Energy Agency (IEA) said that there could be supply shortages next year once demand picks up.Nobuo Tanaka, the IEA’s executive director, warned there could be a “supply crunch”.US light crude for March delivery rose 65 cents to $38.16 a barrel. Brent oil added 29 cents to $45.10 a barrel.Crude prices had jumped on Friday on renewed optimism that a US stimulus package would revive the economy.”Currently the demand is very low due to the very bad economic situation,” Mr Tanaka said.”But 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.”He said that he expected world oil demand to rise by about one million barrels per day from next year.Mr Tanaka also urged the oil producers’ cartel Opec not to seek a rapid price increase by cutting supply, adding that a lower price “helps the economic recovery”.

2009-02-16