The world economy faces a recession if the price of oil stays above $90 a barrel, the International Energy Agency (IEA) warned.
The price of oil crept up again today, reaching $95, following two days of declines caused by the collapse of investment bank Lehman Brothers and slumping stock markets. Fears of a deep recession had pushed the price below $100 a barrel for the first time in six months.
International Energy Agency executive director Nobuo Tanaka said economic growth depends on "what will happen if high prices affect the emerging economies." There has been no sign so far of a slowdown in China, India or the Middle East, he said, despite oil reaching a record $147 a barrel in July. Barclays Capital estimates the average price in the third quarter will be $97.50 a barrel.
The drop in price over the last few days was an aberration caused by investors fleeing any potentially risky assets and hoarding cash, analysts said at the time. Oil traded as low as $90.51 yesterday, when hurricane damage in the Gulf of Mexico and demand in Asia should have caused further rises, based on supply and demand.
US oil consumption has already fallen because of the record prices reached this year, Mr Tanaka said. He called on Organization of the Petroleum Exporting Countries nations not to reduce production when they meet again in December.
The Organization of the Petroleum Exporting Countries producers last week said they would cut production by 520,000 barrels a day, as prices dropped from their highs over the summer. Oil supplies are still tight, according to the IEA. Earlier this year some analysts forecast prices would reach $200 a barrel because demand from emerging economies would create a permanent shortage.
The price of oil crept up again today, reaching $95, following two days of declines caused by the collapse of investment bank Lehman Brothers and slumping stock markets. Fears of a deep recession had pushed the price below $100 a barrel for the first time in six months.
International Energy Agency executive director Nobuo Tanaka said economic growth depends on "what will happen if high prices affect the emerging economies." There has been no sign so far of a slowdown in China, India or the Middle East, he said, despite oil reaching a record $147 a barrel in July. Barclays Capital estimates the average price in the third quarter will be $97.50 a barrel.
The drop in price over the last few days was an aberration caused by investors fleeing any potentially risky assets and hoarding cash, analysts said at the time. Oil traded as low as $90.51 yesterday, when hurricane damage in the Gulf of Mexico and demand in Asia should have caused further rises, based on supply and demand.
US oil consumption has already fallen because of the record prices reached this year, Mr Tanaka said. He called on Organization of the Petroleum Exporting Countries nations not to reduce production when they meet again in December.
The Organization of the Petroleum Exporting Countries producers last week said they would cut production by 520,000 barrels a day, as prices dropped from their highs over the summer. Oil supplies are still tight, according to the IEA. Earlier this year some analysts forecast prices would reach $200 a barrel because demand from emerging economies would create a permanent shortage.
Source: Telegraph|By Amy Wilson
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