Oil prices to hit $200 a barrel by 2035: IEA

Oil prices are projected to rise beyond $200 a barrel as rising demand from China, India and other emerging economies strain supplies which will hit their peak in 2035, according to the International Energy Agency (IEA).

Over the short term, according to the Paris-based IEA's 2010 World Energy Outlook, prices could be expected to rise more than $100 a barrel in 2015.

"Production in total does not peak before 2035, though it comes close to doing so," the agency said.

The forecasts have been arrived at on the basis of a so-called "New Policies" scenario, accounting for the broad policy commitments that have already been announced and assumes the "cautious implementation of national pledges" to cut greenhouse gas emissions by 2020, and a reform of fossil fuel subsidies.

Prices would be lower if stronger policies are put in place including the near universal scrapping of fossil fuel consumption subsidies after 2020. Prices are forecast to be less than $175 per barrel in 2035 in case such measures are taken. The predictions come in the backdrop of prices hitting $87.63 a barrel yesterday, the highest level since October 2008.

"The global outlook for oil remains highly sensitive to policy action to curb rising demand and emissions, especially in the developing world. The global economic recovery is expected to drive oil demand back up following two consecutive years of decline in 2008 and 2009," the agency said.