Oil-importing nations are set to pay a record $2-trillion this year for oil imports if crude prices do not fall, the International Energy Agency (IEA) said on Tuesday, undermining economic recovery.
Crude hit $128 (U.S.) a barrel this month, only $20 short of its 2008 peak, and is up more than 15 per cent since January, largely because of sanctions against oil producer Iran.
"For the first time, the world will pay $2-trillion of oil import bills," the IEA's chief economist Fatih Birol told Reuters.
Mr. Birol said the bill for importing nations had risen from $1.8-trillion in 2011 and $1.7-trillion in 2008.
If crude were to stay at current levels for the rest of the year – about $125 a barrel for Brent and $107 for U.S. crude – oil import bills would cost 3.4 per cent of gross domestic product, up from 3.1 per cent in 2011, Mr. Birol said.
He said the European Union was hit the hardest among industrialized regions on oil import costs because, when converted into euros, the average EU oil price this year was running higher than in 2008.
Dollar-denominated oil costs mean European consumers pay more when the euro weakens against the dollar. The euro has fallen from $1.49 in May at its peak in 2011 to $1.33 now.
At current prices, the bloc will pay $500-billion in 2012 up from $470-billion last year, Mr. Birol said. The EU also faced a 2012 gas bill of $120-billion, $20-billion more than last year.
The cost of oil imports to the United States in an election year would reach a record $426-billion this year, up from $380-billion in 2011.
China would have to pay $250-billion this year, up $50-billion on 2011.
"If China's economy slows down as a result of high oil prices, then it will have an impact on China but also the rest of the world," said Mr. Birol, noting that the world's second biggest oil consumer had helped to pull the world out of the 2008 recession.
Japan's bill would swell to $119-billion, up from $178-billion, and India's net import costs will rise to $118-billion, up from $105-billion, Mr. Birol said.