Supply constraints to push oil up to $105 a barrel by 2012

Oil prices will rebound to $105 per barrel by 2012 due to the upcoming tightening of supply, a new study has found.

According to a Morgan Stanley report, most of the scheduled incremental oil capacity from 2009 to 2015 is highly ambitious and unlikely to be achieved due to technical, financial and political setbacks.

This will result in tight spare capacity, one of the major reasons for price increases in 2005 until oil prices peaked last year.

Energy economists believe price rises in the past years revealed an oil market that has lost a great deal of its flexibility and capacity to deal with supply disruptions or large unexpected increases in global demand.

Emirates Business 24/7