The worldfaces "a permanent oil shock" and will have toadjust to sustained high prices in the next two decades, the International Monetary Fund said yesterday in the starkest official warning yet about the long-term outlook for energy supplies.

Predicting surging demand from emerging countries and limited new supplies from outside the Organisation of the Petroleum Exporting Countries after 2010, Raghuram Rajan, IMF chief economist, said: "We should expect to live with high oil prices."