BP CEO Tony Hayward says lack of investment to blame for oil spike

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"Producers are being hampered by 25 years of low investments, because of low prices," Mr Hayward told the Asia Oil and Gas Conference in Kuala Lumpur today. "The result is a supply chain being stretched to breaking point."

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Mr Hayward added that if the industry was able to increase oil-recovery rates by 5pc from the current 35pc then it would add about 170 billion barrels, or five years of global supply.

Investment in production and exploration has been affected by taxes and governments taking an increasing share of oil and gas revenue, he said. State-run companies are demanding better terms as energy prices surge.

"This is unsustainable and counterproductive," Mr Hayward said. "All it means is that we have less money to invest in new production."

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According to a forecast by Goldman Sachs, the price of crude oil could reach $150 a barrel this summer. "Prices will plateau, not collapse," Jeffrey Currie, the head of global commodities research, told the conference in Kuala Lumpur. "Demand keeps going up but supply can't keep up."

http://www.telegraph.co.uk/money/main.jhtm...09/bcnbp109.xml