Rising oil prices will stifle the global economic recovery, commodity experts say. One expert who spoke to the Sunday Times FT but declined to be named said global oil prices have been floating between the US$70 and US$74 per barrel range over the past few months although the opinion among the market insiders is that there will be an upward movement from current levels.
If oil prices had remained between the US$40 to US$50 range as it was earlier this year after prices plummeted from record highs in 2008, the global economic recovery would have been faster.
The price of oil peaked at over US$143 per barrel on 30 June 2008 but by 21 December 2008, prices had plunged to US$33 per barrel. Through March and April 2009, oil was still trading at the US$40 per barrel mark.
According to the expert, when countries such as China and India get into positive growth, oil prices will also go up. However over the next three months, he said experts do not foresee any increases. “Chinese industries and exports have not yet gotten off the ground and their manufacturing is being affected by the higher prices as it uses a lot of energy.”
The impact of the higher global oil prices is not fully being felt in Sri Lanka because oil is still being subsidized. However, he said Sri Lanka imports all of its crude requirements which is 100,000 barrels per day so increasing prices will definitely be felt although the full impact has not been passed onto the consumer as yet. Crude oil was US$68.55 per barrel as at September 2, 2009.
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