Brent oil closes week at $126, IEA sounds alarm on prices

Brent oil futures close the week’s trading session back near $126 a barrel as the IEA sound an alarm that both Brent and WTI oil prices could march higher unless major oil producers pump out more crude oil to meet summer demand.

Brent Oil Futures – Closing Price

Brent crude oil futures for June 2011 delivery ended the week’s trading session at $125.95 a barrel on the ICE Futures Exchange yesterday evening, $1.91 higher than last week’s closing price of $124.04 a barrel.

Oil Prices – Danger Zone

“We are in the danger zone now with oil prices and how the global economy is responding. The US is not the country which sets the tone for global oil demand growth. We need more oil.” said Fatih Birol, head economist at the IEA.

In an interview with Dow Jones Newswires, Birol said that world oil demand is set to increase by as much as three million barrels a day over the next few months, and oil prices could march higher unless major producers pump more oil.

Oil demand in China, Brazil and other regions continues to march higher. Birol said the strength of oil demand in these regions, and not the US, is crucial in determining future oil prices.

Brent Crude Oil Price

According to Birol, Brent crude oil futures, Europe’s main benchmark for oil trading, more accurately reflects the cost of oil worldwide, as supply issues depress the value of US NYMEX traded WTI oil futues (West Texas Intermediate) crude.

The IEA and Peak Oil

The IEA is an independent agency formed out of the wake of the 1973 oil crisis. It forecasts global oil production, monitors the international oil market and other energy sectors.

Only five years ago the IEA confidently stated that world oil production was set to rise to 120 million barrels a day by 2030.

But IEA chief economist Fatih Birol says the world’s crude oil production peaked in 2006 and says that oil prices are likely to rise 30 percent over the next three years. That would mean Brent oil prices would be trading at $164 a barrel.

Anyone Seen 4 New Saudi Arabia’s?

“The existing oilfields are declining so sharply that in order to stay where we are in terms of production levels in the next 25 years, we have to find and develop four new Saudi Arabias.” commented Birol, and says one of the conclusions the IEA has come to is that the age of cheap oil prices are over.

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Brent oil closes week at $126, IEA sounds alarm on prices