INTERVIEW - Oil price over $70-80 risky for recovery - IEA

ISTANBUL Wed Dec 9, 2009 7:49pm IST

A customer fuels her car with unleaded petrol at a Morrisons supermarket in Coalville, central England, in this October 2008 file photo. REUTERS/Darren Staples

A customer fuels her car with unleaded petrol at a Morrisons supermarket in Coalville, central England, in this October 2008 file photo.

Credit: Reuters/Darren Staples

Related Topics

ISTANBUL (Reuters) - Oil prices above $70-80 a barrel could be risky for global economic recovery, the chief economist of the International Energy Agency said on Wednesday.

Birol told Reuters in an interview that current oil price levels were good for investment.

Oil prices have more than doubled from the lows near $30 a barrel at the end of 2008 to around $75 a barrel as investors eye signs of wider economic recovery which could boost oil demand. Oil was trading at $73.79 at 1045 GMT.

"Price levels we see today betwen $70-80 dollars is a good price level for almost all investment," said Fatih Birol, chief economist of the IEA, which advises 28 industrialised countries.

"But if the prices would go higher than this, it would be risky for the global economic recovery," he said.

He also said that demand could rise in 2010 given global signals for a possible economic recovery, but that demand would depend on the rate of recovery.

"How fast and how much demand will increase will almost be entirely up to what the economic recovery will look like. But if we were to believe a few recent signals ... we may see a rise in demand," he said, without quantifying the increase or giving a time frame.

He said he was looking at demand coming from China and saw recent U.S. employment data that show employers cutting fewer jobs than expected as positive for consumption.

Birol also said that he saw an easing of political risk revolving around disputes between Russia and Ukraine that left natural gas consumers in eastern Europe in the cold last year.

Ukraine-Russia ties hit a low point last January and millions of people in southern Europe were left without heating after Russia halted gas deliveries to Ukraine for two weeks in a price dispute before a deal was brokered.

Birol also said that lower natural gas consumption in Europe over the next several years would increase competition among major natural gas pipeline going to Europe such as the Russian-backed South Stream and the European Union-backed Nabucco pipeline, each seen worth billions of dollars.

(For more news on Reuters Money visit www.reutersmoney.in)

FILED UNDER:

Economic Pulse

REUTERS SHOWCASE

Nifty Above 8,600

Nifty Above 8,600

Nifty hits record high above 8,600; state-run lenders gain  Full Article 

Indian in Iraq

Indian in Iraq

India says no contact with 39 men held by Islamic State in Iraq.  Full Article 

Sahara Issue

Sahara Issue

Sahara looks to raise $650 million loan to fund bail.  Full Article 

Bhopal Tragedy

Bhopal Tragedy

Bhopal's toxic legacy lives on, 30 years after industrial disaster.  Full Article 

Essar Group

Essar Group

Exclusive - Essar's planned oil-for-steel deal tests Iran sanctions  Full Article 

Islamic Fund

Islamic Fund

India gets new Islamic equity fund but debt market still off-limits  Full Article 

Fiscal Deficit

Fiscal Deficit

April-October fiscal deficit nears 90 pct of full-year target  Full Article 

Oil Prices

Oil Prices

Oil hits new four-year low post OPEC as glut looms  Full Article 

Gold Imports

Gold Imports

India eases gold import rule in surprise move.  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device  Full Coverage