Al-Naimi sees another oil spike coming

Energy ministers and officials at the Group of Eight energy summit met in Rome as oil prices hovered at a six-month high of $60 a barrel, but below the $75 a barrel level producers say is needed to spur investment in new production. Petroleum and Mineral Resources Minister Ali Al-Naimi said the world was heading for a fresh spike after the current phase of faltering demand and lower prices, which he said reflected the economic downturn rather than being an indicator of things to come. ?We are maintaining our long-term focus rather than being swayed by the volatility of short-term conditions,? he said in prepared remarks at the summit. ?However, 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.? Low prices and weak demand had discouraged investment in energy projects, while high development costs, tight credit markets and energy policies focused on alternative fuel sources were compounding the problem, Al-Naimi added. The Saudi warning was echoed by others at the energy summit that ended yesterday, with a top official of the International Monetary Fund (IMF) also forecasting price spikes over the medium-term following relatively stable markets in the short-term; Kazinform cites the Arab News. See www.arabnews.com for full version