Prices likely to rise over fears of 'serious oil supply crisis'

A prominent Arab energy analyst has warned of a serious oil supply crisis that could trigger a fresh price spike in the absence of sufficient investments in crude capacity development projects.

Nicolas Sarkis, Director of the Paris-based Arab Oil Research Centre, which acts as a consultant to the 11-nation Organisation of Arab Petroleum Exporting Countries (Oapec), echoed concerns by the International Energy Agency (IEA) and other groups that insufficient capital in oil capacity expansions because of low oil prices could create a sharp supply gap.

“The slowdown in capital spending and the cancellation or postponement of a growing number of oil projects have finally sharpened awareness of the grave dangers now facing the development of world oil supply,” Sarkis wrote in the centre’s monthly bulletin, Arab Oil and Gas.

He said in Opec members alone, the sharp drop in prices since the all-time high of $147 (Dh540) a barrel attained last July has already led operators to cancel or put on hold some 35 exploration-production projects.

These figures, he added, point in the same direction as the conclusions of many other recent reports warning about a fresh supply crisis, including one by Cambridge Energy Research Associates (Cera).

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