Brent oil trading at $97, IEA says high prices to continue

18 January 2011 18 January 2011

BonTrade

Brent oil futures open Tuesday’s trading session firm between $97 to $98 a barrel, with high oil prices set to remain high for 2011, according to a statement on Monday from the chief economist of the IEA (International Energy Agency).

Latest Brent Oil Price

In London, Brent crude oil futures for March 2011 delivery was trading at $97.65 a barrel, 06.00 GMT this morning on the ICE Futures Exchange.

High Oil Prices = Bad News

According to the IEA, oil prices at about $100 a barrel is bad news for any meaningful economic recovery in the west.

“If we assume that oil prices remain around $100 in 2011, the import bill to GDP in the US will be 2.6%, very close to the level we saw in 2008 of 2.8%. In Europe, it would be 2.2%, exactly what we had in the year 2008. High oil prices are not just bad news for oil consuming countries but also oil producing countries.” said Fatih Birol, the chief economist of the IEA.

OPEC Oil Output Maxed Out?

OPEC commented on Monday in its monthly report that it’s own member countries would need more of its own crude oil this year than originally thought. This comment adds weight to the fact that world oil demand is clearly higher than current crude oil output.

“If oil prices go up, we may not see a correction in terms of oil demand response. Energy efficiency measures in industrialised countries mean there are now limited options for alternatives compared with the 1970’s.” Birol added.