Oil investment fears rise as Saudi predicts new spike

ROME (Reuters) – Saudi Arabia warned oil prices could spike to beyond the near $150 record high of 2008 within three years as it joined other energy leaders on Monday to call for more investment to boost production over the long term.

Energy ministers and officials at the Group of Eight energy summit wrapped up the two-day meeting by urging the industry to pump money into projects to expand capacity despite the credit crisis, which has put the brakes on investment.

GLOBAL OIL AGENCY

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.

He said energy investments were likely to remain subdued in 2010, after an expected decline in 2009. The International Energy Agency predicts investment in oil and gas exploration and production will fall 21 percent in 2009.

Reuters