The global economy could be damaged if oil prices return to $100 (£76) a barrel, experts have warned, after crude prices hit a four-year high of $82.16.
Some market watchers have predicted prices between $90 and $100 by the year’s end after Opec last weekend rebuffed Donald Trump’s demands for the oil cartel to rein in prices by expanding production.
Now after Tuesday’s high a leading analyst has said that if prices climbed to $100 – a level not seen since September 2014 – growth in oil demand would be “annihilated” and demand would fall sharply.
Moreover, PetroMatrix said, emerging economies’ growth could suffer because of steep crude prices causing inflationary pressures that lead to interest rate rises. Those countries could also be forced to cut oil taxes, widening budget deficits.
Any slowing in emerging markets would add to the recent economic challenges facing countries including Turkey and Argentina.
The price of Brent crude, the international benchmark, has crept up in the past week as it became clear that major oil producers were not planning to increase output.
Trump tweeted last week that the “Opec monopoly must get prices down now”, but when the cartel met in Algiers on Sunday it focused on how a previously agreed increase would be divvied up, rather than a new boost.
Observers expect prices to keep rising, mainly due to concerns over the impact of US sanctions on Iranian oil exports from November.
Analysts at Barclays said they saw further upside risk to oil prices, while Ashburton Global Energy Fund predicted prices above $90 by the end of the year due to “tight supply, healthy demand, falling global inventories … and anaemic spare capacity”.
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