Oil industry prices cannot be held back

The International Energy Agency (IEA) cannot prevent prices in the oil industry from rising again, it has been claimed.

Last week, in a bid to reduce spiralling oil prices, the watchdog permitted the release of 60 million barrels of oil reserves, however, the move has done little to allay fears of a supply squeeze.

Analysts are now concerned about the show of strength, as the move only reduced prices by $9 (£5.60) a barrel to $105.21, compared to the 30 per cent reduction in prices seen following the release of reserves after Hurricane Katrina.

Caroline Bain, of the Economist Intelligence Unit, said "Although the immediate impact of the IEA's reserve release will be to depress prices, in the more medium term, it could actually be bullish for oil prices. Reserves are finite and cannot be released forever."

Opec, the organisation in control of half the world's oil production, recently refused to increase levels of production.