Wednesday, 29 February 2012 12:12
DUBAI - As oil price has hit a 10-month high, economists see no let-up in the rise mainly due to geopolitical factors.
Crude prices (Brent) closed above the level of US$ 125 per barrel in London trading on Sunday. Dr. Giyas Gokkent, Chief Economist and Head of Research at National Bank of Abu Dhabi (NBAD), said that the price rally in the black gold is likely to continue.
"Supply disruptions and heightened geopolitical risks are supportive of higher energy prices," he said.
The row between the West and Iran on Tehran's nuclear energy program is in the center of current oil prices developments. Iran 's Fars news agency reported Sunday that Tehran has refused to deliver a 500,000 barrel oil shipment to Greece as a sign of protest against the European Union's decision to stop oil imports from Iran from June 1 on, but semi-official Mehr news agency later denied such reports quoting Pirouz Mousavi, managing director of the National Iranian Oil Terminals Co.
For the Gulf Arab countries, the effects of rising oil prices are far more complex than at a first glance. On the hand, they improve their national income, but from a certain level, negative spill-over effects might occur, Gokkent said.
"There isn't a specific price level that one can point to as a danger sign, but it has to be kept in mind that higher oil prices mean transfers from consuming countries to exporters. The higher the price, the greater the transfer and the greater the impact on importing countries," Gokkent told Xinhua.
However, "Oil importers may save excess receipts and thus cause a global slowdown," Gokkent said. "But there has been a sharp rise in expenditures of oil exporters in recent years as well," he added.
According to the International Institute of Finance, a 10 dollars per barrel increase in oil prices translates into a whopping 180 billion dollars income rise for oil exporters.
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