Azerbaijan, Baku, Febr. 1 / Trend A. Badalova /
Political riots in the Middle East will contribute to a sharp rise in oil prices. It can cause a serious blow to the global economic recovery, international experts said.
"Political upheavals such as what is occurring in Egypt and Tunisia cause rippling effects throughout the region's economy. These situations cause volatility in oil prices and apprehension in foreign investments," Todd Wynn, a climate change and energy policy analyst at Cascade Policy Institute, told Trend.
Higher oil prices could easily hamper economic recovery in the United States and elsewhere, he said.
Oil prices on world markets amid the political instability in the Middle East continue to grow. The price on Brent oil this week exceeded the mark of $100 per barrel. As a result of trading on Monday, Jan. 31, the price on March futures for Brent increased by $1.59 a barrel up to $101.01 per barrel. The cost of March futures for WTI on the New York Mercantile Exchange increased by $2.85 up to $92.19 per barrel.
Last time the price on Brent exceeded the mark of $100 per barrel in October 2008.
Favorable macroeconomic data influenced the growth in world oil prices.
Political instability in the Middle East will always raise concerns about oil supply and be bullish for oil prices, Andrew Reed, an ESAI analyst, told Trend.
Higher prices are undoubtedly a concern for the fragile economic recovery. At the same time, demand growth has been exceeding expectations lately. While demand growth is contributing to higher oil prices, that same demand growth can be interpreted as a positive economic signal, he said.
The riots in Egypt could send oil prices up sharply if the market concludes that the instability could spread to Saudi Arabia and the Gulf, Robert Zubrin, the president of Pioneer Astronautics, told Trend.
If it is just market fears, the effect will be short term. But if the instability actually does spread, the effect could be huge, and long-lasting, he said.
High oil prices could send the world economy into a deep recession for years, he said.