Crude prices expected to surge from 2012: report

SEOUL, July 26 (Yonhap) -- International oil prices are expected to increase
sharply from 2012 as falling investment in the exploration of new oil fields is
likely to spark a drop in supply, a private think tank said Sunday.
According to LG Economic Research Institute, global crude prices may again break
the US$100-per-barrel mark from 2012-2013 due to a pricing policy by the
Organization of Petroleum Exporting Countries (OPEC).
"In light of slumping investments in the exploration of new oil fields, global
dependence on oil supplied by OPEC will inevitably increase in coming years,"
said the think tank. "OPEC may attempt to cut production in a bid to ensure more
profits, sending prices soaring."
The price of West Texas Intermediate, a type of crude oil used as a benchmark in
oil pricing, averaged $51 per barrel in the first half of this year, said the
institute affiliated with LG Group, one of South Korea's leading conglomerates.
The think tank based its forecast on the fact that global investment in oil
exploration has been falling sharply this year in the wake of the global
financial crisis.
Major energy institutes and investment banks expect this year's spending on the
development and exploration of oil fields to drop 10-20 percent from last year,
it said.
Given the expected surge in international prices, the think tank said South
Korea, which depends on imports for all of its oil needs, should prepare for
supply instability.
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