Global recovery might be stopped in its tracks as oil prices rise
23 Feb, 2011 09:42
Libya is the world's 12th-largest exporter of oil, and investors fear the anti-government uprising will disrupt global supplies.
Energy prices could turn what had been forecast as a very profitable year into a very complicated one. Some analysts are saying the prices could rise up to $150 a barrel this year. Oil prices have been particularly volatile in recent years, reaching $147 a barrel in July 2008, before plummeting to $32 a barrel by December of that same year amid the financial crisis. However, analysts also say if the situation in the Middle East does not escalate further, the rise in oil prices can be considered a short-term problem. Transportation is an industry particularly vulnerable to the rising oil prices, in turn affecting all businesses that rely on the transportation of any goods they produce or sell. Surging oil prices are a big challenge for airlines too.So far there have been no disruptions to crude supplies.Financial advisor and wealth expert Marco Pietropoli believes that high oil prices are likely to hit ordinary consumers’ wallets too.“Oil prices have a knock-on effect to the cost of most items, because you need energy to make products and deliver them to shops. If oil prices continue to stay high, that will have significant inflation pressures on Europe and the world.”Oil prices may lead to soaring prices for food, transportation, travel and heating and definitely deplete consumer spending power.However Vadim Mitroshin from Otkrytie believes the fears are being largely overplayed, especially since oil supplies are still moving relatively freely and OPEC is saying it is ready to meet any shortages in supply should there be any.“So far we haven’t seen any, even minor disruptions of supplies to all major markets, including Europe. We have problems in Egypt and notwithstanding oil shipments through the Suez Canal were unaffected,” he said. “What we currently see in Libya – violence and unrest – actually has not produced any material impact on crude supplies.”