Oil price rises could damage economic recovery

An IEA economist has issued a warning following continuing unrest in the Middle East.

International Energy Agency economist Fatih Birol has warned that rising oil prices could damage the global economic recovery.

Unrest in the Middle East, and most recently the violent situation in Libya has caused a rise in oil prices into what Mr Birol describes as the "danger zone".

Mr Birol highlighted that the economic recovery in OECD countries were likely to be particularly vulnerable to the impact of oil prices.

In Britain, the price of fuel at the pump was at its highest this Monday. Diesel was set at 134.31p a litre, and petrol 128.95p a litre.

The UK government is now facing calls from motoring groups to reject the planned fuel duty rise, which was due to begin in April.

Chancellor George Osborne has stated that the planned automatic increase would be reviewed on 23 March, when the Budget is delivered.

Several oil groups operating in Libya, including Repsol and Wintershall have announced they will be cutting production.

Since the weekend, there has been an eight per cent drop in daily production of oil in Libya.

OECD countries have emergency stockpiles, 1.6bn barrels of oil, which could be released in the event that supply is disrupted.

At an International Energy Forum meeting, held in Riyadh and attended by the largest oil consumers and producers, it was detailed that OPEC (Organization of the Petroleum Exporting Countries) was prepared to pump more oil if necessary.