LONDON -(Dow Jones)- A crude price at about $100 a barrel will bring the oil burden on developed economies to around levels last seen in the crisis of 2008, the chief economist of the International Energy Agency said Monday.
In an interview with Dow Jones Newswires, Fatih Birol said "if we assume that oil prices remain around $100 in 2011, the import bill to [gross domestic product] in the U.S. will be 2.6%, very close to the level we saw in 2008" of 2.8%.
"In Europe, it would be 2.2%, exactly what we had in the year 2008," added Birol, whose agency acts an energy watchdog for the world's most industrialized nations. The statements put a quantitative assessment on a warning by the IEA that current oil prices--presently close to $100 a barrel--could endanger the economic recovery in industrialized countries.
The comments could ratchet up pressure on the Organization of the Petroleum Exporting Countries to formally increase its production ceiling after the group said Monday in its monthly report that markets would need more of its own crude this year than originally thought.
Despite mounting demand for its oil, OPEC has so far rejected the idea of opening the spigots. Its president, Iran oil minister Masoud Mirkazemi, was quoted Monday as saying: "Some of the OPEC members see no need for an emergency meeting [to change quotas] even with prices at $110 or $120."
But Birol in the interview warned that "One should think twice what one aims at. High oil prices are not just bad news for oil consuming countries but also oil producing countries."
The risk is not just that high prices "could derail the economic recovery" in industrialized nations but also that in emerging countries where incremental oil demand is coming from "it will slow down" growth.
However, OPEC in its monthly report Monday said the current price hike was partly reflecting non-fundamental factors, singling out mounting speculation on futures contracts. Some members have also blamed a weak dollar as an artificial boost to headline crude prices.
Birol acknowledged those factors could contribute to the formation of oil prices but said the physical oil market remained the driving force. "Today's and tomorrow's supply and demand realities play a key role," he said.
In that respect, the economist said that the economy was further endangered by a lagging response of oil demand to rising prices.
"If prices go up, we may not see a correction in term of demand response," Birol said. Emerging "subsidies play a role of cushion" in emerging markets while energy efficiency measures in industrialized countries mean there are now limited options for alternatives compared with the 1970s, he said.
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