LONDON - It is easy to blame speculation for the doubling of oil prices over the past 12 months, but the real reasons are strong demand growth, coupled with shortages of supply and refining capacity, the IEA said on Tuesday.
In its Medium-Term Oil Market Report, the International Energy Agency (IEA) said there was little evidence speculation had distorted prices over both the longer and shorter term, although it noted a lack of data on inventory levels, as well as on financial market participants.
"Blaming speculation is an easy solution which avoids taking the necessary steps to improve supply-side access and investment or to implement measures to improve energy efficiency," the IEA concluded.
It placed the emphasis on the sheer number of factors responsible for driving up oil, which hit a record of close to $144 a barrel on Monday.
Perhaps the most important driver is the strain on supplies of distillates, which include diesel and heating fuel.
"Distillate tightness has been extreme in late 2007-8 and may have been the single largest factor," the report said.
Power outages, including in China and South Africa, helped to create "a perfect storm" and increased the demand for distillates for back-up generation, it added.
Another ingredient in the rally is the weakness of the U.S. dollar, which has had an impact on oil priced in dollars, but oil denominated in other currencies is also close to records, showing other factors are boosting prices, the IEA said.
In its Medium-Term Oil Market Report, the International Energy Agency (IEA) said there was little evidence speculation had distorted prices over both the longer and shorter term, although it noted a lack of data on inventory levels, as well as on financial market participants.
"Blaming speculation is an easy solution which avoids taking the necessary steps to improve supply-side access and investment or to implement measures to improve energy efficiency," the IEA concluded.
It placed the emphasis on the sheer number of factors responsible for driving up oil, which hit a record of close to $144 a barrel on Monday.
Perhaps the most important driver is the strain on supplies of distillates, which include diesel and heating fuel.
"Distillate tightness has been extreme in late 2007-8 and may have been the single largest factor," the report said.
Power outages, including in China and South Africa, helped to create "a perfect storm" and increased the demand for distillates for back-up generation, it added.
Another ingredient in the rally is the weakness of the U.S. dollar, which has had an impact on oil priced in dollars, but oil denominated in other currencies is also close to records, showing other factors are boosting prices, the IEA said.
