Saudi Oil Min: Price Spike In 3 Yrs If Investment Lags

ROME -(Dow Jones)- The world may witness a new crude oil price spike in two to three years - potentially worst than a peak of $147 a barrel seen last year - if oil producers don't invest enough, Saudi Arabia's oil minister said Monday.

The world's largest oil producer is the latest to warn about the risk associated to under-investment after the International Energy Agency, which represents energy consumers, voiced similar concerns.

Speaking at a G8 Energy ministers summit in Rome, Saudi oil minister Ali Al-Naimi said his country is "continuing to invest now in both the upstream and downstream to help ensure an uninterrupted supply of energy when the global economy recovers."

But "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 we witnessed in 2008," he added.

Oil prices rose to $147 a barrel in July 2008, exacerbating a global downturn, before plunging to $32 a barrel in December as the recession hit commodities, leading to canceled and delayed investments. Prices have since regained strength at about $60 a barrel.

"The extreme volatility we experienced is detrimental to our goal of establishing secure and stable energy markets," Al-Naimi also said, according to a copy of his speech.

"It discourages the smooth flow of capital into the energy sector and in doing so, undermines our collective energy security," he said.

Earlier Monday, top International Monetary Fund official John Lipsky warned persistently subdued investment next year could lead to an oil supply crunch.

-By Benoit Faucon, Dow Jones Newswires; (44) 207 842 9266; benoit.faucon@dowjones.com