Oil markets are expected to tighten again after easing in 2009/10 so producer countries should increase investments, the head of the International Energy Agency (IEA) said on Tuesday.
"The situation could be better in 2009/2010 but after that the situation will be getting tighter again," IEA executive director Nobuo Tanaka told reporters on a visit to OPEC member Algeria. "We want producing countries to increase investment."
The agency, a Paris-based adviser to 27 industrialized countries, said this month that world oil demand growth would grow at a rate of 860,000 barrels per day (bpd) in 2009, reaching a total of 87.7 million bpd, down from growth of 890,000 bpd this year.
Demand for oil by China, India and the Middle East has been cited as a factor behind crude's almost sevenfold surge from $20 six years ago to a record high of more than $140 a barrel.
Tanaka said that oil prices remained very high and overall world consumption would continue to grow despite declining demand in major industrialized countries, but the situation would improve by 2009 thanks to new investment in production.
Thereafter they would tighten again, he said.
Asked by reporters for his evaluation of the market, Tanaka said: "It is very very tight...Spare capacity is very low."
He added: "Prices are very high but the situation will improve by 2009 thanks to new investments."
He added: "Current demand is very strong because of China, India, Latin America as well as the Middle East. There is a decline in major consumer countries but the emerging economies are very strong. We expect demand to continue to grow, as a whole."