High crude price could dent global recovery: IEA
Tokyo, January 31, 2013
High Brent crude prices could dent a global economic recovery while Europe's economy holds the key to determining world oil demand in 2013, the chief economist of the International Energy Agency said on Thursday.
Brent crude hovered near $115 per barrel on Thursday, not far from a more than three-month high, as the US Federal Reserve's pledge to stick to its bond-buying stimulus plan and upbeat euro zone data fuelled optimism about oil demand.
"My biggest worry nowadays is the oil price," Fatih Birol of the West's energy watchdog said in Tokyo ahead of an industry seminar. "Current prices are rather on the high side, especially given the fragile state of the global economic recovery," he told Reuters.
"The current economic situation is not as bright as we hope to see, and I believe the current rather high oil prices are a major challenge themselves for the global economic recovery efforts," he added.
Earlier in January, the IEA, which advises industrialised nations on energy policies, sharply raised forecasts for 2013 global oil demand by 240,000 barrels per day (bpd) to 90.8 million bpd, or 1 percent higher than 2012, despite concerns about the health of the world economy.
The IEA may revise upward its projections for global oil demand this year, Birol said, depending on the European economy, whose recovery will have "spill-over effects" for other regions.
"For me a key question is how, and if, the European economy is going to recover this year. The weakest chain is Europe. If you see a major difficulty in Europe, the implications are for the global economy and therefore, oil demand," he said.
A slow, gradual recovery for the European economy, coupled with improving signals from China and the United States, could hold out the promise of better growth than the IEA expects, and prompt it to look at its numbers again, Birol added.
Investors are watching for key data such as China's official manufacturing PMI and US monthly nonfarm payrolls on Friday. - Reuters