LONDON, Dec 13: Global economic growth would be threatened if oil prices average $70 per barrel next year, according to a study by Merrill Lynch. “Investors expect the global economy to maintain its current momentum in 2006 so long as the price of oil remains below $69 per barrel,” said the study, based on a survey of 300 fund managers by the US investment bank.
If crude prices averaged around $70 per barrel in 2006, there could be “serious consequences” for the world economy, the study found.
“One of the great surprises in 2005 has been the resilience of the global economy to a rising oil price,” said David Bowers, chief global investment strategist at Merrill Lynch.
Oil futures would need to hit an average of $80 per barrel or more before the global economy would start to suffer, according to 16 per cent of those surveyed.
The price of oil hit an all-time high of $70.85 per barrel in New York on August 30 following Hurricane Katrina, which devastated refining and crude production facilities along the Gulf Coast of the United States.
However mild weather in the northern hemisphere during October and November saw prices retreat.
The International Monetary Fund forecast in September that global economic growth this year and in 2006 would stand at 4.3 per cent, down from 5.1 per cent in 2004, owing to soaring oil prices.—AFP
