June 29, 2009 / 12:14 PM / 8 years ago

Too rapid oil price rise could hurt recovery

PARIS (Reuters) - The IEA is still very concerned too rapid an oil price rise could derail any economic recovery and consumer countries should seize the moment to improve energy efficiency, the agency’s executive director said on Monday.

“We are watching carefully because if the price moves too fast compared to the economic recovery, it could derail the economic recovery. This is something we are very concerned with,” Nobuo Tanaka said, echoing previous comment.

U.S. crude futures have recovered from a low of $30.40 in December to roughly $70 a barrel, although they are still far from a record of nearly $150 hit last July.

“If the economic growth is really happening as many people are expecting, then it (the market) could be tighter,” Tanaka told Reuters, but said so far IEA data had not supported that.

He was speaking after the International Energy Agency released a report cutting sharply its medium-term forecast for oil demand in the light of economic recession. [ID:nLT674055]

The prediction is based on International Monetary Fund figures, which see growth recovering to nearly 5 percent annually for 2012-14.

A slower rebound in the economy could mean an extended contraction in oil demand, the IEA said.

Tanaka said there was also a further “hidden scenario” according to which economic growth could be higher and yet energy demand could be lower -- provided governments were serious in enforcing energy efficiency.

“Don’t be complacent about oil prices, consumer countries can do a lot,” Tanaka said.

He earlier told a news conference permanent structural changes in demand could already be under way, meaning consumer governments had “a golden opportunity” to introduce long-term efficiency and promote sustainable growth.

Editing by James Jukwey

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