IEA to Analyse Oil Highs

It does not seem too long ago when we were getting worried that oil might reach $100 a barrel. Now it’s nearly $110 and showing no signs of stopping. So the International Energy Agency has convened talks with global oil experts to help determine “whether current oil prices are justified by market fundamentals”.

The talks, to be held in Paris on Monday, highlight concern among rich countries’ policymakers about the causes of the recent oil price rises and its implications for inflation and monetary policy.

Lawrence Eagles, head of the IEA’s oil markets division, said that not all the blame should be put on speculation. He said previous rises had also been blamed on speculation, such as when prices moved above $50 a barrel in 2004, but that had turned out not to be the case.

“With hindsight, those prices now seem to reflect the increasing cost of accessing and developing reserves. If it was a speculative push in prices, the speculators were right,” Mr Eagles said.

Even still many people are still buying oil instead of a weakening dollar..