The International Energy Agency (IEA) yesterday said there could be an oil supply crunch from 2010 once global demand recovers and the impact of delayed investment crimps future supplies.
The agency, which advises 28 industrialised countries, is concerned that some oil producers are deferring projects to expand supply. It expects oil demand growth to resume next year after its first drop in a generation.
"Currently the demand is very low due to the very bad economic situation," the IEA's executive director, Nobuo Tanaka, told reporters on the sidelines of a conference in London.
"But when the economy starts growing, recovery comes again in 2010 and then onward, we may have another serious supply crunch if capital investment is not coming," Tanaka said.
Oil's rally from below $20 in 2002 to a record high near $150 last year was fuelled in part by growing demand from China and other emerging economies which strained supplies.
The Paris-based IEA has often warned investment in new supply is too low.
Tanaka said he expected world oil demand to rise by one million barrels per day (bpd), or about one per cent, in 2010 as growth resumes outside of the Organisation for Economic Co-operation and Development (Oecd).
In 2009, world oil demand is contracting as recession, triggered by the banking crisis, spreads through all continents. The IEA chief urged Opec not to seek rapid rises in oil prices through further supply cuts as current prices are helping the economy.
Opec has agreed to cut supplies by 4.2m bpd since September to prop up prices. Earlier this month, the group said its members had delayed 35 new oil projects due to low prices and the slowdown in demand.
Some Opec countries have raised the prospect of another supply cut at the group's next meeting in Vienna on March 15. Asked how he viewed such a move, Tanaka said a sudden oil price surge would be unhelpful.
"If Opec is aiming at a rapid price increase by cutting supply, maybe it would not be a good thing for the global economic recovery," he said.