A lack of international investment in oil exploration and production activities, which threatens to constrain growth in future oil supplies, is a primary factor behind the rise in global oil prices, an official from the National Iranian Oil Company told Dow Jones Newswires.
"There is less upstream investment in oil-producing countries," Hojjatollah Ghanimifard, executive director for international affairs at NIOC, said in a telephone interview late Tuesday.
"Many oil-producing countries -both OPEC and non-OPEC-need more investment, and this makes it seem that there will not be enough supply to meet demand. So there is this gloomy outlook" that is contributing to the rise in oil price, he said.
Crude oil futures on the New York Mercantile Exchange reached $133.17 a barrel Wednesday, setting a new record on the back of continued concerns about tight global oil supplies amid rising world demand for energy.
Oil prices have advanced this week on a surprise drop in U.S. oil inventories and on news that the Organization of Petroleum Exporting Countries, or OPEC, will not consider changing its output before its next meeting in September.
The U.S. and some Western European countries have increased calls for OPEC to raise output in an effort to reduce prices. But OPEC members generally attribute the steady rise in crude oil prices to the weakening U.S. dollar and purchases made by financial speculators.
Ghanimifard also said that speculators such as pension funds and hedge funds, which are backed by vast amounts of liquidity in international financial markets, have been spurring the rise in energy prices.
"The financial industry is not giving it (liquidity) to the countries that could invest in oil and gas," Ghanimifard said. "So the upstream investment outlook for the future gives this idea that demand cannot be met in the future and spare capacity cannot be built up, and so this gives a gloomy view."