by Emmanuel Defouloy
PARIS, July 29 (AFP) - The recent surge in the price of oil has once again raised the spectre of an economic slowdown, in particular in the United States, but its impact has divided economists who say a critical factor is the length of time the price remains high.
Oil prices eased back from record high levels on Thursday after Russia's justice ministry said embattled oil giant Yukos could continue oil production and sales.
But despite this traders remained nervous about the risk of disruption to supplies from Russia, whose oil is seen as crucial for the world's future energy needs.
On Wednesday New York's light sweet crude for delivery in September hit an unprecedented 43.05 dollars a barrel and set a record finish of 42.90 dollars, up 1.06 dollars on the day.
According to Nigel Pain, an economist at the Organisation for Economic Cooperation and Development (OECD) in Paris, this is not good news when the world economy is in a recovery phase. However, he said if the rise was temporary it would be manageable and unlikely to derail the world economy.
"It would nevertheless be different if prices were to remain stuck above the 40 dollars (a barrel) mark," he cautioned.
Much may depend on whether prices, which are partly dependent on rumours about the state of Yukos and the speculation swirling around the company, will flatten in the coming months or whether the strength of world demand, notably in China, will help keep them high.
Economists like Antoine Brunet, head strategist at HSBC-CCF, said the high rate could continue. It may not resemble a full-blown crisis as in the mid-1970s but rather a long, drawn-out trend "perhaps up to 50 dollars (a barrel) for 2005," he said.
High oil prices are helping to reduce consumers' purchasing power and company profits and are encouraging central banks to raise interest rates, all of which handicap growth.
The consequences of this on the world's major consuming countries vary. The eurozone, where growth is already lower than elsewhere, "is partly protected at present by the strength of the euro against the dollar," says Anne Beaudu, an economist at French bank Credit Agricole.
Asian countries, despite their dependence on oil imports to satisfy their huge energy demands, can sustain the pressure better thanks to their considerable exchange reserves and their trade surpluses.
"It should not be too severe an impact as of now because the economies can still pay for it," said Chew Ping, a Singapore manager at the credit rating agency Standard and Poor's.
The Asian Development Bank estimated last month the gross domestic product (GDP) of 10 Asian countries including Japan, China and India would contract by just 0.1 percent this year if the price of a barrel of crude remained hovering around the 40-dollar mark.
The US may be more directly exposed, however, in that the Federal Reserve has not ruled out a rise in interest rates in the case of increased inflation and has slightly lowered its GDP growth forecast for 2004, now between 4.50 percent and 4.75 percent, ahead of a more marked slowdown in 2005 of between 3.50 percent and 4.0 percent.
Economists are divided over the scale of the risks. The French National Institute for Statistics and Economic Studies (INSEE) had gone out of its way to play down the situation at its last report on the economic situation, presenting a less pessimistic view than either the International Monetary Fund or the OECD.
The statistics agency maintains that in the major consumer countries the consumption rate of petroleum products represents a less and less important part of overall consumption in the past 20 years, making growth in these countries less vulnerable to oil than in the 1970s.