Oil not at the end of rollercoaster ride says International Energy Agency

The recent fall in oil prices may be a temporary blip, according to the International Energy Agency (IEA). Oil prices fell to their lowest point in five months on Tuesday. However, the IEA said that problems with production in Libya and Iraq will have a significant effect on supply.

The oil price rose dramatically over the summer, due in large part to conflict in the Middle East and fears over western military intervention.

The oil price will continue to be subject to dramatic swings, the IEA said:

European oil demand is showing signs of life, in line with underlying economic data depicting that the euro zone officially came out of recession in the second quarter of 2012.

Given proverbial uncertainties about the weather and geopolitics, the market might not be at the end of its rollercoaster ride.

The remarks come just two days after the agency declared that the US could overtake Saudi Arabia as the world's number one oil producer by 2016. The IEA, on Tuesday, said it expected two chapters for the oil market. Up to 2020 it expects a surge in shale oil production, followed by a decline and re-emergence of Middle Eastern dominance in the market. The think tank believes the oil price will reach $128 (£80.14) per barrel by 2035.

Oil is currently trading at $107 (£66) per barrel.