A rule of thumb for the price of oil in the past five years has been to take the last digit of the year and add a zero: 2002 saw prices in the $20s; 2003 in the $30s; now oil is hovering around $70 a barrel. These high prices are desirable for steering the economy away from oil, but in the meantime they could also spell trouble. Oil companies need to adjust to this new reality and rethink their business model.

The latest report by the International Energy Agency warns of an oil supply crunch in five years. Demand is expected to rise at more than 2 per cent annually. Supply, the IEA calculates, will not be able to keep pace. Nations outside the Organisation of the Petroleum Exporting Countries are expected to add about 1 per cent to supplies per year. That puts most of the burden on Opec, in particular Saudi Arabia, which would face capacity constraints itself, the IEA says.