Oil producers lie in wait to feed off the global financial recovery

August 5th, 2009 by admin | Filed under Daily News, Energy Prices, Global Credit Crisis, Recession.

money info As oil prices began to surge towards a record high for the year an important official from the International Energy Agency (IEA) warned that the world economy cannot sustain any further increases in the price of crude oil.

The benchmark price of $70 should not be breached otherwise a damper would be placed in the path of world economic recovery, the official warned.
Prices for crude oil reached a high for the year on Monday of $73.75, with analysts from the IEA explaining that the increase was spurred by results of improved manufacturing statistics coming out of China and as well as a steady rise in construction starts in the US.

There have been increased fears over recent months that as the economic situation begin to improve in the West and the demand for crude oil begins to increase as a result, the oil producing nations will begin to push their prices up. The results could be that higher energy prices will make a serious impact on the fiscal measures taken by western governments to get their economies out of recession.

French President Nicolas Sarcoxie and Gordon Brown the UK prime minister, have already called for increased scrutiny of the energy markets. In addition the US commodities regulator instituted a series of hearings designed result in increased limits on oil futures trade.

Overall fears that the demand for crude oil in China demand would the most important determinant factor in oil prices, which could set an indeterminate edge to the worldwide supply and demand balance could become very tight if other countries began to grow in 2011 or 2012.

World crude oil prices reached up to $147 in July 2008, but crashed to below $40 by the end of the year. In response to the statements issued by the IEA, leading mark analysts have stated that the tolerable range of oil prices appeared to be somewhere between $70 and $80 a barrel. If prices rise to $90-$100 a barrel even China could be affected.