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.
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