Jun 05, 2012, 03.45 PM IST

IEA: Oil near $100 still a threat to global economy

Oil prices near USD 100 a barrel are still a threat to a slowing global economy that is likely to consume less fuel than the International Energy Agency had forecast, the IEA's executive director said on Tuesday.

Source: Reuters

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IEA: Oil near $100 still a threat to global economy

Oil prices near USD 100 a barrel are still a threat to a slowing global economy that is likely to consume less fuel than the International Energy Agency (IEA) had forecast, the IEA's executive director said on Tuesday.

Brent crude this week dropped to a 16-month low below USD 96 a barrel before recovering to around USD 99, well off a peak of over USD 128 in March but not low enough to stimulate rather than slow growth, Maria van der Hoeven said.

"Let's be honest, we still confront a situation of near triple digit oil prices," van der Hoeven told reporters at news conference during a conference in the Malaysian capital.

"This is placing a huge burden on budgets and that's contributing to the risk of further economic slowdown."

Increased supply from OPEC producers had helped ease the price and continued to do so, she said.

Weakening economic activity in China, India and Europe could result in global oil demand growth coming in below the IEA's forecast of 800,000 barrels per day (bpd) in 2012, van der Hoeven said.

"Oil demand growth could be markedly weaker than our base case assumption," she said, declining to give a new estimate on global demand growth for the year ahead of the release of the IEA's monthly oil market report next week.