Oil prices could hit economically damaging record highs if unrest in Africa and the Gulf cuts investment in output, the West's energy watchdog warned oil producers, which said the real problem was likely defaults among euro zone members and banks. The International Energy Agency (IEA), which advises major oil-consuming countries on energy policies, said oil prices could spike by a third to above their all-time high of $147 a barrel. The Organization of the Petroleum Exporting Countries (OPEC) said the main risks were of price falls.
Relations between OPEC and the IEA hit lows earlier this year when OPEC failed to agree on an increase in oil output and the IEA released its stockpiles to compensate for the loss of Libyan oil and to help support flagging economic recovery. OPEC has already signaled it sees no need to release any extra oil to the markets when it meets in December but will probably face increased pressure from consumers as the IEA insists that current prices are damaging the economy.
"In 2011, $102 is the average price through to today which means the global economic recovery is at risk. We are in the danger zone for the global economy at current levels," IEA economist Fatih Birol told a news conference.
"There is a possibility that production growth from the (Middle East and North Africa, MENA) region may not be what the consumers would like to see. This would be a pity for the global economy, a pity for the oil sector and a pity for those governments."
Birol's comment followed the release of the IEA's annual World Energy Outlook, which said that if investment in the MENA region runs one-third lower than the $100 billion per year required between 2011-2015, consumers could face a near-term rise in the oil price to $150 per barrel. Benchmark Brent crude was down $1.54 cents at $113.56 a barrel by 1150 GMT on Wednesday, pressured by European debt worries, after reaching its highest close since Sept. 15.