LONDON (Reuters) - Oil prices could rise to $90 a barrel or more by the end of this year, and probably average $70-$80 for 2009 as a whole, Libya’s top oil official, Shokri Ghanem, said on Wednesday.
Oil prices were mostly below $50 a barrel in the first quarter of 2009, but have since risen close to $70 a barrel, sparking fears higher crude could derail any economic recovery.
“The price may go to $90 or more by the end of the year,” Ghanem told the Reuters Global Energy Summit.
“What is driving this improvement is sentiment ... the worst of the economic crisis is behind us.”
Ghanem added he was starting to see demand for oil improve and that compliance with production quotas from members of the Organization of the Petroleum Exporting Countries (OPEC) was likely to remain around current levels.
OPEC has agreed to cut 4.2 million barrels per day of oil from the market since September in a bid to shore up prices which collapsed from a record high close to $150 a barrel last July to lows near $32 at the end of last year.
A Reuters survey on Wednesday placed OPEC members’ compliance with production quotas at around 75 percent, down from 81 percent in March and April.
Ghanem echoed the views of other OPEC members that prices needed to rise to secure future investment in oil production. But he cautioned oil markets were likely to tighten in coming years regardless.
“In 2-3 years, or maybe even next year, the talk of peak oil will be looming again. What is happening is temporary; demand will come back,” Ghanem said.
“The fear is not in my mind that there will be a supply crunch — but there will be a supply shortage,” he said, adding high volumes of spare production capacity would always be needed to calm increasingly nervous markets.
“I think even consumer countries now want to always have spare capacity — you always need it to feel comfortable ... otherwise prices will go sky high.”
OPEC Secretary General Abdullah al-Badri told the Reuters summit on Tuesday members had seven-eight million bpd of unused production available if prices rose too quickly.
Ghanem was participating in the Reuters Global Energy Summit by telephone from Tripoli.
(For summit blog: blogs.reuters.com/summits/)
Additional reporting by Alex Lawler, Barbara Lewis and Jane Merriman; editing by James Jukwey