Rising oil prices threaten to crimp recovery in the world’s leading economies, the International Energy Agency warned on Tuesday saying that unexpectedly strong activity could overheat the market. Higher prices and tighter lending conditions “could stall OECD economic recovery” the IEA said, referring to the 30 advanced economies of the Organisation for Economic Cooperation and Development.
But the IEA also said that the outlook for supplies of oil was improving. Oil prices fell for a fifth straight session on Tuesday in London trading, dropping a further 2% to below $83 a barrel, as a forecast increase in US crude stocks highlighted rising supplies and weak demand in the world’s largest energy consumer.
US crude oil for May delivery slid $1.66 to $83.65 a barrel in early trades, having earlier hit an April low of $82.51, down 5% from an 18-month high of $87.09 hit last week. Brent crude oil, the benchmark for the Atlantic basin and most of Europe, Africa and Asia, held the premium gained over US crude on Monday for the first time this year, but dipped by $1.02 to $83.75 a barrel.
The IEA said there were “questions over the sustainability of prices markedly higher” than the 70-80 dollars a barrel level.
“Ultimately, things might turn messy for producers if $80-100 a barrel is merely seen as the new $60-80 a barrel,” it added.
The OECD, based in Paris, includes Britain, France, Germany, Japan and the United States, and the IEA is its oil monitoring branch.
The IEA said current higher prices could be “sustained, raising anew concerns about the impact on the global economy. Underlying concerns, in some quarters, that oil markets are overheated remain, setting the stage for a sudden reversal of fortune,” it said.
Source: http://economictimes.indiatimes.com/news/economy/indicators/Oil-price-surge-threatens-economic-recovery-IEA/articleshow/5798908.cms
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