Economic turnaround 'could prompt spike in oil prices'

23 September 2009

Oil prices could begin to surge as the global economy recovers from the recent downturn and may be the source of the next "big global shock", according to one economist.

Andrew Sentance, a member of the Bank of England Monetary Policy Committee, said the energy market could pose a major threat to any economic turnaround.

In a speech to energy industry economists in London, he claimed an upturn in demand as the recession comes to an end could see prices begin to increase quickly.

"I can see substantial upside risks to prices over the coming recovery as demand picks up across the global economy," Mr Sentance stated.

"Against the background of supply constraints, this creates the potential for continuing price volatility."

His comments may prompt some residents to stock up on supplies of home heating oil sooner rather than later, with any potential increase in crude prices likely to have a knock-on effect on the cost of the domestic fuel.

The outlook mirrors that of Christophe de Margerie, head of French oil firm Total, who told the BBC this week that prices could reach more than $100 (€67.60) a barrel in the coming years.

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