Fluctuating oil prices 'no cause for alarm'

Fluctuating oil prices should not cause alarm, but are a key source of global instability, participants in a round-table discussion on economic issues at the World Economic Forum said today.

Oil prices have soared in recent weeks, with the degenerating security situation in Iraq and a recent terror attack on a petrochemical facility in Saudi Arabia fuelling the upward drive. Analysts have cited lost production in Iraq coupled with lower production in Nigeria and Venezuela as well as exploding demand from China as worsening the situation.

“We should be concerned, not alarmed, about oil prices,” said Alan Larson, the US under-secretary of state for economic affairs. “Oil is available to meet the needs of the global community, but fluctuating prices is a source of concern.”

Augusto Lopez-Claros, chief economist and director of the Global Competitiveness Program in the World Economic Forum, said during the same discussion that “delays in restoring Iraq’s oil production” are a concern of the international community, along with fluctuating prices.

“Oil will remain a source of instability in the world, and perhaps in the short-term it is the most significant factor,” Lopez-Claros said, citing terrorism and security as other factors.

On Thursday, oil prices soared to a record on the New York Mercantile Exchange, crossing US 41 a barrel and settling at the highest point in the 21-year-history of crude futures trading in New York.