With the price of crude oil hitting $90 (£67.1) on Wednesday for the first time since 2014, experts have warned that oil companies should reconsider their investments in new fossil fuel projects or they would waste billions.

That’s according to a new report by Carbon Tracker which suggests that even if these prices mean that future drilling projects could be economical, they will not last long.

Speaking to ELN Mike Coffin, Head of Oil and Gas at Carbon Tracker, said: “For oil what we are seeing is a growing demand and growing pricing as the world recovers from the Covid pandemic. What we have seen in our report is that if you invest in projects now for these short-term price signals you will end up wasting a lot of capital.”

Mr Coffin said firms could waste billions of dollars of investments if they make decisions based on the current oil prices.

He predicted that within the next five years the industry could face a sudden shift to rapidly falling demand for oil, driven by the clean technology revolution and government climate policies, with significant financial implications for investors.

The report from Carbon Tracker estimated that if the oil price fell to an average of $40 (£29.8) after 2026, some $500 billion (£373bn) of investment could be wasted on projects which were no longer commercial.

Mr Coffin, who is one of the authors of the report, said that will be the result of companies continuing to invest in businesses based on the short term price signals under a scenario that oil peaks in 2026 before falling away rapidly as a result of policy action on climate.