Oil prices surge to fresh highs on supply concerns
Continue reading the main storyOil prices have surged to a two-and-a-half-year high on concerns about a shortfall in supply.
Brent crude rose by 0.4% to $123.17 in early trade in Asia. Light crude gained 0.5% to $110.82.
There have been concerns that the unrest in Libya and the Middle East will hurt supplies.
Production in Libya, the world's 17th largest oil producer, has been severely affected as fighting between the government and rebels continues.
While there has been concern about a shortfall in supplies from the oil producing nations, the demand for oil has been increasing.
The economic growth of emerging nations is producing a surge in demand, fuelled by a need for oil to power the industrial sector, as well as an ever growing number of vehicles on the road.
Supply trendsThe International Monetary Fund (IMF) issued a warning that the disparity in demand and supply of oil is likely to push prices even higher.
"There is a risk that the tensions between demand and supply trends could intensify again and prices could rise rapidly," said Thomas Helbling an advisor to IMF's research department.
The IMF also warned that the markets are likely to face further scarcity in oil supplies.
"The increase in the trend component of oil prices suggest that the global oil market has entered a period of increased scarcity," the IMF said.
New suppliesAs concerns continue about a shortfall in supply, oil companies' efforts to add more supply sources are also being hampered.
"To make matters worse there are considerable constraints affecting the development of new oil supplies." said Rajiv Biswas of IHS global insight
He said the current events in North Africa and the Middle East are forcing companies to rethink their investment strategies.
"Political risks in large, low-cost oil producers like Iraq and Iran mean that companies face considerable difficulties and restrictions in investing in these countries" he added.
Mr Biswas said as these issues continue to affect the markets, oil prices are likely to rise even further.
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