EU crisis could cause oil price slump

LONDON, June 14 (UPI) -- An escalation of the European financial crisis could wipe as much as half of the value from the per-barrel price of oil, analysts at Credit Suisse said.

Brent crude, traded on the electronic IntercontinentalExchange, moved up more than $1 to $98.20 per barrel Wednesday on reports that U.S. oil stockpiles declined modestly. Overall, however, crude oil prices have eased this year.

Credit Suisse analysts Jan Stuart and Stefan Revielle were quoted by The Daily Telegraph newspaper in London as saying Brent crude prices could fall to $50 per barrel if the European economic crisis gets worse.

The European debt crisis spread this week when Moody's Investors Service downgraded the credit ratings for Spain and Cyprus.

"Oil demand would deflate sharply following acute crises of confidence," the analysts said.

Oil prices in 2008 declined by close to $100 per barrel as the global economy plunged into recession.

Stuart and Revielle said some of the indicators in 2012 are worse than in 2008.

Their concerns come as the International Energy Agency described global oil markets as over-supplied, however. Globally, the IEA said in its monthly report, crude oil demand "should rise sharply in coming months."