Oil On The Boil  

To use some phrasing from the increasingly erratic Donald Rumsfeld, Adam Porter has been busy, very busy, this week - this piece comments on the various sources of oil price volatility that he perceives - concern about the health of King Fahd, expectations of increased demand in Q3, the belief that OPEC has reached its capacity, Matthew Simmons' book and lack of transparency in relation to Saudi oil reserves.

Prices that had dropped below $50 per barrel for the first time this year rebounded to $55.40 on the New York Mercantile Exchange (Nymex). And they look set to stay high through the rest of the year according to International Energy Agency (IEA) forecasts.

This prognosis was supported by Royal Dutch Shell's Global Scenarios report this week. The oil giant forecast rising demand and prices over the next 25 years. Shell determined price volatility, such as witnessed by energy markets earlier this week, as an ongoing problem.

The author of the report Albert Bressand, vice president of Global Business Environment at Shell International in London, said that Shell's three possible scenarios would mean rising energy costs between 2.6% and 3.8% a year. In turn this would mean "far more politicised energy relations ... creating new sources of tensions among countries".