Rising oil price would hurt economic rebound

UNITED NATIONS – Oil prices would threaten a rebound in the global economy if they rise beyond current levels, the chief economist of the International Energy Agency said.

‘We would like to see oil prices not to go higher than these levels as it is a certain risk to economic recovery,’ Fatih Birol told Reuters.Oil prices have more than doubled from the lows near US$30 a barrel at the end of 2008 to near US$80 a barrel as investors eyed signs of wider economic recovery, which could boost oil demand.However, analysts have said too high an oil price could help curb nascent economic recovery.Oil producing group Opec meet in December to decide on a production policy in the light of current oil prices and economic recovery.Birol declined to comment on what he thought Opec might decide in December, but said that higher oil prices might not be beneficial for producers as well as consumers.’Opec should see the situation, that higher prices than we have now will be bad for the consuming countries, but it is bad for everyone in the oil business,’ he said.Birol said that upstream investment in oil fell in 2008, which could bolster prices as demand picks back up.’Upstream oil investments have gone down 19 per cent in 2009 compared to 2008, which is a risk if it continues to be like this. If the demand from China and India grows it can be a risk for higher prices than we have now,’ Birol added. – Nampa-Reuters