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High oil price is inflation threat, says IEA Oil price is risk to economic recovery, says IEA
(40 minutes later)
The current high price of oil will threaten economic prosperity in 2011, according to the International Energy Agency (IEA). The current high price of oil will threaten economic recovery in 2011, according to the International Energy Agency (IEA).
It said oil import costs for countries in the Organisation for Economic Co-operation and Development had risen 30% in the past year to $790bn (£508bn).It said oil import costs for countries in the Organisation for Economic Co-operation and Development had risen 30% in the past year to $790bn (£508bn).
The agency says this is equivalent to 0.5% of gross domestic product (GDP) in the OECD.The agency says this is equivalent to 0.5% of gross domestic product (GDP) in the OECD.
The IEA's chief economist said oil was a key import of any developed country.The IEA's chief economist said oil was a key import of any developed country.
Fatih Birol warned: "If the oil price goes much higher, it affects everything from the trade balance to household spending."Fatih Birol warned: "If the oil price goes much higher, it affects everything from the trade balance to household spending."
He added that that meant pressure on household budgets and higher inflation.He added that that meant pressure on household budgets and higher inflation.
The IEA was established in the 1970s as the West's energy watchdog to counter the growing influence of the Organization of the Petroleum Exporting Countries (Opec).The IEA was established in the 1970s as the West's energy watchdog to counter the growing influence of the Organization of the Petroleum Exporting Countries (Opec).
The agency's latest look at the prospects for 2011 was a month ago, when it forecast a pick up in global demand.The agency's latest look at the prospects for 2011 was a month ago, when it forecast a pick up in global demand.
The price of US light oil rose to a 27-month high earlier this week, but has since fallen back to $88.98 a barrel, with Brent Crude at $92.83.The price of US light oil rose to a 27-month high earlier this week, but has since fallen back to $88.98 a barrel, with Brent Crude at $92.83.
Opec members have been unconcerned by higher recent oil prices and have not shown an inclination to change export quotas.Opec members have been unconcerned by higher recent oil prices and have not shown an inclination to change export quotas.
While higher oil prices bring in more money to oil exporting countries, making life too difficult for its customers can backfire.While higher oil prices bring in more money to oil exporting countries, making life too difficult for its customers can backfire.
Mr Birol told the Financial Times newspaper: "Oil exporters need clients with healthy economies but these high prices will sooner or later make the economies sick, which would mean the need for importing oil will be less."Mr Birol told the Financial Times newspaper: "Oil exporters need clients with healthy economies but these high prices will sooner or later make the economies sick, which would mean the need for importing oil will be less."