Oil costs could hit global rebound

There is a "strong potential" that persistently high oil prices could derail the global economic recovery, the International Energy Agency (IEA) chief economist warned Tuesday.

"My worry is that the current prices (are) a major risk for the global economic recovery and I'm very worried to see the same movie that we saw in the year 2008," Fatih Birol said at a conference in Singapore.

"I think if they stay so, there is a strong potential we see a risk that the high prices, the high oil prices can derail the economic recovery," he said.

Birol said the average price of oil this year is ê110, much higher than the ê90 seen in 2008 when crude hit a record above ê147 before the onset of the global recession.

The recession lasted well into 2009, and the global rebound has so far been slow especially for the United States and Europe, with Asia emerging stronger than the rest of the world.

The latest surge in crude prices is being driven mostly by China's energy-hungry economy and to lesser extent, India and the other emerging markets, Birol said.

"All the growth comes outside of the OECD countries," he said, referring to the Organisation for Economic Cooperation and Development (OECD) which groups the world's developed nations.

"If I can simplify, there are five countries who are driving the global energy demand, namely China, China, China, India and Middle East in that order," said Birol, underscoring the Asian giant's importance as a major energy consumer.

"They are responsible (for) more than 90 percent of the growth in global energy demand."

The IEA, based in Paris, is the energy policy arm of the 34-member OECD.

Follow Emirates 24|7 on Google News.