ROME - Oil prices could spike to beyond the near $150 record high of 2008 within two to three years unless the industry invests in new projects to expand capacity, Saudi Arabian Oil Minister Ali al-Naimi said on Monday. The influential minister of the world’s top oil exporter said the industry faced “faltering demand and significantly lower prices” but that the market reflected the global economic downturn rather than being an indicator of things to come.
“We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions,” he said in prepared remarks to the G8 energy summit in Rome.
“However, if others do not begin to invest similarly in new capacity expansion projects, we could see within two-to-three years another price spike similar to or worse than what we witnessed in 2008.”
Low prices and weak demand had discouraged investment in energy projects, with high development costs and tight credit markets compounding the problem, Naimi said.
Energy policies advocating a “rapid shift away from oil to unproven alternatives” also fostered greater uncertainty and investment risk and the lack of clarity on energy policies may worsen the underinvestment, Naimi said.
Consumer and producer nations needed to work together to improve the transparency of the oil markets, and also consider whether an expanded role for governments in regulating the markets was warranted, Naimi said.
