OIL prices are set to remain “high and volatile” in coming years, and will present a “serious risk” to global economic prospects, the International Monetary Fund warned governments last night.

In an analysis that threw the IMF’s weight behind other warnings over the economic dangers from high crude prices, the fund said that with the oil market already tight, further strong growth in demand was poised to keep prices high.

The warning from the global economic watchdog came days after a gloomy analysis from Goldman Sachs, the investment bank, raised the spectre of a Seventies-style “superspike” in the cost of crude.

The report from the IMF’s economists, an advance release from its World Economic Outlook, which is released twice a year, highlighted the existing lack of spare oil production capacity around the world.

The fund’s estimates suggest that surplus production capacity presently stands at just 1.5 million barrels a day — down from five million barrels in 2002.

“Projections of oil demand and supply suggest that spare capacity will remain limited going forward,” the IMF said in a note accompanying its report.

“In such a tight oil market, any supply disruptions or unexpected movements in demand can cause sharp changes in the price of oil.”

The IMF’s projections suggest that worldwide consumption of oil will rise from 82 million barrels a day to almost 140 million barrels by 2040.

Strong growth in demand is being propelled by rising living standards in developing countries. Nations outside the 30-strong club of rich nations in the Organisation for Economic Cooperation and Development will account for three quarters of the expected future increase in oil use, the IMF estimates.

The fund also calculates that China alone will contribute almost a quarter of the expected increase in global demand for crude up to 2030, because of its continued rapid economic growth and the size of its population.

In China, the IMF said that transport demands would be a critical factor.

Martin Sommer, an IMF economist, said that historical experience implied that the number of vehicles driven by the Chinese would “skyrocket” from 21 million three years ago to 390 million by 2030.

The fund said that the chances for increased oil supplies from new production capacity would be limited in the short term.

It is expected that a crucial consequence of this will be that Western reliance on oil supplies from the Opec oil cartel will rise markedly.

The IMF estimates that if oil prices over the period from 2010 to 2030 were at the real-terms level presently indicated by crude futures markets — $34 a barrel — demand for oil from Opec would be more than twice the cartel’s present production level.

Since the oil cartel will probably not be willing to double its production to meet this demand — as it seeks to exploit its pricing power — Mr Sommer said this implies a long-term oil price of between $39 and $56 a barrel in real, inflation-adjusted, terms.

Explore Economics

• Pre-Budget Report 2008

• Budget 2009

• World Economic Forum

• The Times MPC

Times Recommends

• C&G axed - 1,660 jobs to be lost
• UK house prices rise 1.1% as buyers return
• Mixed reaction to US banks repaying bailouts