The International Energy Agency is forecasting that oil prices will exceed $100 a barrel in the next five years and by 2035 will exceed $200 a barrel.
In its annual outlook report, the energy watchdog also said world demand will grow by more than a third over the next 25 years due to increased consumption in China and other emerging economies.
Oil prices would rise even further if governments did not act to curb consumption, the IEA’s chief economist and lead author of the report, Fatih Birol, said.
The IEA is also calling for an end to government subsidies for fossil fuels as a way to cut energy demand and boost the global economy.
The growing concentration of oil use in transport and the shift of demand towards subsidised markets were limiting the scope for higher prices to choke off demand, the IEA said.
“If subsidy policy does not change, with increasing price assumptions, these $312 billion in subsidies for 2009 will reach $600 billion in 2015. That’s huge,” Birol said.