The price of crude oil risks reaching $60 a barrel if possible US military action in Iraq leads to a wider conflict in the Middle East, an expert warned today.
However, Mr Herman Franssen, director of Petroleum Economics, said oil prices could fall very quickly if possible US military action in Iraq meets little resistance, if anti-American demonstrations in Saudi Arabia remain under control and if "regime change" in Iraq takes place without difficulty.
If this happens, he believes the market would be fully supplied with oil for the next 10 years without any price pressure.
Mr Franssen said a wider conflict would not have the same inpact on the world oil market as the oil embargo of the 1970s.
Mr James Placke, a former State Department official responsible for Middle East questions, also reckons that crude oil prices could double from the current $30 per barrel if a conflict spreads. On the the hand, he judges it unlikely that Iraqi oil will flood the market even in the event of a rapid US victory. The impact of an oil embargo would be limited by the existence of futures markets in New York and other places, by increased transparency and by the International Energy Agency's response mechanism, he said.
Also, Middle Eastern supplies are much less important on the world market than in the 1970s because of a diversification of supplies, he said.
PA