02 July 2008 | Paul Snell
The world may be in the grip of a third "oil shock" according to the International Energy Agency (IEA).
And the energy policy advisery group, which was set up during the first oil crisis in the early 1970s, warned current high prices for the commodity are expected to continue in the near future, with similarities to crises in the 70s and 80s.
Refinery limitations, supply constraints and continued demand in emerging markets are all contributing to the price hikes.
"Record prices in the oil market in recent months have become a threat to the global economy and social welfare of millions of people - some are calling it the 'third oil shock'," said Nobuo Tanaka, executive director of the IEA, speaking at the World Petroleum Congress in Madrid.
He added a lack of capacity in the market was the main factor in recent record prices. "OPEC [Organization of the Petroleum Exporting Countries] production is at record highs and non-OPEC producers are working at full throttle, but stocks show no unusual build. These factors demonstrate it is fundamentals pushing up the price."
Tanaka said increased investment was necessary to ensure oil supplies remained steady. Crude oil is currently trading at more than $141 a barrel.
Tony Hayward, BP chief executive, also told the conference on Monday there was more to high prices than speculators in the market. He said huge demand and declining supply were the root causes. "The era of cheap energy is over, at least for the medium term," he said.
* Lorries and trucks are coming to London for a third protest today as part of haulier's group TransAction 2007's campaign against high fuel prices and tax costs.