PARIS (Reuters) - Oil prices remain a threat to the fragile global economic recovery despite a recent fall, the International Energy Agency’s chief economist said on Wednesday, adding the IEA remained ready to release emergency oil stocks if needed.
North Sea Brent crude oil reached a peak of more than $128 in March before declining around $15 gradually over the last two months as tensions in the Middle East have eased and oil supplies have increased.
“Even current prices are far too high for the current economic context... and pose a serious risk,” the IEA’s chief economist Fatih Birol told the 2012 Reuters Global Energy & Environment Summit. “Economic recovery was especially at stake in Europe, the U.S., Japan and China,” he added.
“I‘m concerned for Europe and I‘m also very concerned that these high prices would hit the still hesitant and slow U.S. economic recovery,” Birol said.
Birol repeated that the Paris-based agency, which advises 28 industrialized nations on energy issues, remained ready to release strategic oil stocks if needed.
Oil markets have been on alert for a possible release from strategic reserves after news in March the United States had held talks with the British and French on the issue.
In an election year, the U.S. administration is anxious to bring down gasoline prices as the summer driving season looms and further debate is expected at G8 talks at the end of this week in Camp David, United states.
“We are monitoring the oil market all the time, we look at economic and stock data, and remain ready to act if market conditions warrant,” Birol said.
The European Commission said earlier on Wednesday it saw no immediate need for any release of oil stocks although it was in close contact with the United States and the IEA. (ID:nL5E8GGJ1I)
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Iraq was the only country in the world which could significantly increase oil production given the decline of existing fields and rising demand in emerging countries, Birol said.
Iraq is potentially one of the world’s last great unexplored territories after decades of neglect due to wars and sanctions.
“If there is no good news from Iraq, it’s a bad news for the global oil outlook in the short, medium and long term,” he said.
Birol said he was concerned over the risk of a lack of investment in the Middle East and Northern Africa after the Arab Spring, a wave of protests which forced dictators out of power.
“When I look at investment schemes and investment appetite in some key Middle Eastern and Northern African countries, I see that several investments are diverted to social spending, to infrastructure spending,” Birol said.
Beneficiaries from high oil prices included the Organization of the Petroleum Exporting Countries (OPEC) and Russia.
OPEC’s revenue in 2012 was likely to reach or exceed $1.2 trillion, up $140 billion on 2011 if oil prices remained at current levels. Russian earnings from oil and gas exports would reach $400 billion, some 25 percent of the country’s gross domestic product.
“In the oil market there are always winners,” he said.
Reporting By Muriel Boselli, Dmitry Zhdannikov and Oleg Vukmanovic,; editing by William Hardy