Oil will hit $200 a barrel as suppy peaks, says IEA

City A.M. Reporter
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AL oil supplies will come close to a peak by 2035 when oil prices will exceed $200 a barrel, the International Energy Agency said yesterday, as China and other emerging economies drive demand higher.

The IEA, in its 2010 World Energy Outlook, said crude oil output had already peaked and would flatten out in the next 10 years, boosting reliance on costlier and more polluting unconventional sources such as oil sands.

“Production in total does not peak before 2035, though it comes close to doing so,” the IEA said in the executive summary of the report. That projection was according to the report’s central case, the New Policies scenario.

The Paris-based IEA, which advises 28 industrialised countries, also raised its mid- and long-term oil price forecasts, despite slashing oil demand estimates by 2035, citing growing supply uncertainty. Oil prices would rise even further if governments did not act to curb consumption, said the IEA’s chief economist and lead author of the report, Fatih Birol.

“The message is clear, the price will go up, especially if consuming countries do not make changes in the way they consume oil, especially in the transport sector,” Birol said.

Oil has hit $87.63 a barrel – its highest since October 2008, after hovering around $70-80 most of the year.