Oil puts recession in IEA's spotlight

April 3, 2012 at 6:10 AM
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PARIS, April 3 (UPI) -- Prices on the global oil market are nearing the point where they threaten to push the world economy into recession, an IEA economist said from Paris.

Though oil prices have relaxed in recent trading, prices are on the rise over the longer term. The U.S. Energy Department lists prices for West Texas Intermediate crude oil at around $107 per barrel for the last week in March, down slightly from recent high-water marks but up 8 percent since the beginning of the year.

Fatih Birol, chief economist at the International Energy Agency, warned of economic trouble if oil prices reached the $120 per barrel mark for the year.

"The current price levels are on average higher than the awful year of 2008 and as such have the capacity to tip the global economy back into recession," he said.

Oil prices topped $145 per barrel in July 2008, an increase of more than 52 percent from January 2008 levels, before the global economy fell into recession that year.

The IEA said oil price spikes have preceded every global recession since the 1970s. While oil intensity, defined as oil consumption per unit of gross domestic product, is lower, the economy is still fragile overall, the agency said.

With current crude oil prices, the IEA said, there was a general sense of "economic malaise."

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