With the price of a barrel of oil expected to breach the $100 barrier in the coming weeks, experts have warned that the era of cheap oil is now dead.
Leaders and oil ministers from the Organisation of Petroleum Exporting Countries (Opec) will gather this week at a meeting in the Saudi capital, Riyadh, to discuss the spiralling price of oil, which has nudged ever nearer the once unthinkable $100 level.
Members are thought to be split over the merits of a further increase in production following a decision in September to up supply by 500,000 barrels a day from the start of this month. But analysts have warned that short-term tinkering is likely to make little long-term difference.
"Economics and politics will keep oil ticking over $100," said Mark Spelman, energy expert at consultants Accenture. "When economics are tight, geopolitics very uncertain, stocks low, winter approaching and we have a weak dollar, the oil price can only go up... the era of cheap oil is now dead."
Mr Spelman said that a dearth of supply was the primary problem, with the global economy needing a further two million barrels of oil a day in 2008 and another two million in 2009.
"Production is more concentrated than ever on West Africa, Russia and the Middle East," he added. "It's not clear that these major producing areas can just turn on the taps even if they have the political will. And there are issues of infrastructure, with many leaky pipes in Russia for example."
US crude climbed above $96 a barrel last Friday off the Wednesday highs of nearly $99 when the market was spooked by gloomy comments from Federal Reserve chairman Ben Bernanke. Political unrest in Pakistan added to jitters.Reuse content