A rapid rise in oil prices could hamper the global economic recovery, the executive director of the International Energy Agency said on Thursday, but added it was too early to say if that scenario was unfolding now. "If the movement is too rapid, a spike in prices, it could have a very negative impact on the world economic recovery," Nobuo Tanaka, executive director of the IEA, told Reuters in Quintero, Chile.
IEA estimates world oil demand would increase by 1.42 million barrels per day in 2010 compared with 2009. When asked if current prices were the start of a spike, he said, "It is difficult to say.
If it is reflecting strong economic recovery it may not necessarily be worrisome, but if that is not the case it could be very negative." Oil prices hit a one-year high on Wednesday of $82 a barrel, but fell on Thursday as gloomy US jobs data sent investors seeking safer havens. US oil futures traded down 86 cents to $80.51 a barrel by 1:35 pm EDT (1735 GMT).
The IEA has previously expressed concerns of a possible price spike if insufficient investment is made to add new sources of oil to keep up with demand. After hitting a record high of nearly $150 a barrel in July 2008, oil prices collapsed to just above $30 in December.
Combined with the financial crisis, that led to some exploration projects to be postponed. Opec's secretary general Abdullah al-Badri, secretary general of the Organisation of the Petroleum Exporting Countries, said this week the group's members have restarted seven of about 35 projects that had been frozen.
Nobuo said he expected oil-producing countries to continue to have spare capacity next year and in 2011 but that a return to tight markets would take place after 2015. "We still see next year and in 2011 good spare capacity levels but after that, if the demand growth is robust, spare capacity will decline toward 2013, 2014 and 2015 and then maybe a tighter market will come back," he said.