An Imperial Oil refinerySean Kilpatrick
A fragile global economic recovery will be hurt if oil prices stay at $70 (U.S.) per barrel or rise higher, the International Energy Agency's chief economist said.
Fatih Birol, in an interview with Reuters late on Monday, said he did not want a decision from the Organization of the Petroleum Exporting Countries (OPEC), when they meet on Sept. 9, to boost prices to levels that could damage the recovery.
"The decision I think they will take will foster the economic recovery, rather than dampen the economic recovery hopes," said Mr. Birol. "We would not like to see prices going up to levels that would be a risk to the global economic recovery."
Mr. Birol said oil prices of $70 and above would be a problem for the recovery.
"If the prices go much higher than today I think that would be a problem for the economic recovery; $70 and above, especially for oil importing countries," said Mr. Birol.
OPEC, which provides a third of global oil supply, has pledged to cut oil production by 4.2 million barrels per day as oil demand has fallen with economic recession.
Oil prices have had a turbulent year, hitting an all-time high of over $147 in July 2008 before plunging towards $32 in December.
Since then they have more than doubled due to hopes of economic recovery. U.S. light crude for September delivery was trading at $70.80 at 1000 GMT.
Mr. Birol also said there may not be enough natural gas demand in Europe to support both competing major pipeline projects, Nabucco and South Stream, when they are expected to go on line.
The European Union-backed Nabucco pipeline project aims to deliver 31 billion cubic metres of gas to Europe by 2014, while the rival Russian South Stream project plans to pump Russian gas from 2015. Both pipelines would transit Turkish territory.