Saudi Arabia warns of crude price spike above 2008 record high

Saudi Arabia has warned that oil prices could again surge above the record high level in 2008 within three years unless other producers join the Kingdom and pump sufficient investment into capacity expansions.

The government-owned Saudi Aramco, the world’s largest oil exporter, said the collapse of crude prices in the second half of 2008 was only a temporary phenomenon and demand would pick up again in the near future.

“We must recognise that depressed oil prices are not only detrimental to the economies of petroleum producing nations but also to the interests of consuming countries. That may seem counterintuitive, but consider that sustained and timely investments in petroleum projects and infrastructure are essential for maintaining future supplies at adequate levels,” said Mohammed Madi, Chief Representative in Beijing of Aramco’s Saudi Petroleum.

“Current oil prices do little to encourage the necessary massive investments, and without them we may experience supply shortages once demand picks up in the future. Unfortunately, our industry may already be sowing the seeds for future problems. 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,” he said.

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