Saudi Arabia, a country that holds the world’s fourth-largest gas reserves and the world’s largest recoverable oil reserves, warned on Monday that oil prices could spike to beyond the near $150 record high of 2008 within three years.
From Reuters: Saudi Arabian Oil Minister Ali al-Naimi said the world was heading for a fresh spike after the current phase of faltering demand and lower prices, which he said reflected the 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 at the [G8 energy] summit .
“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.”
The Saudi warning was echoed by a top IMF official, who forecast price spikes over the medium-term would follow relatively stable markets in the short-term.
“With long time-to-build lags, significant setbacks to oil investment today could set the stage for future sharp price increases,” IMF First Deputy Managing Director John Lipsky said.