Surging international oil prices amid growing unrest in the Middle East and North Africa region threaten to choke the nascent global economic recovery with experts fearing oil hovering over USD$120 a barrel over a sustained period may well become the tipping point to send several economies back into recession, according to GulfNews.com.
HSBC economist Simon Williams told Gulf News that employment continues to be weak in the United States and in Europe while rising commodity prices erode disposable income and that's a real threat to a recovery that looks fragile in most of the western world.
Williams said consumers are already feeling the strain of high oil prices which, currently, are at two-and-a-half-year highs, with mounting supply concerns in the international market pushing the prices higher.
Saudi Arabia, the largest oil producer in the Organisation of Petroleum Exporting Countries (Opec) has thus far been unable to make up for the shortfall in oil supply from Libya, much of which has been shut off as a consequence of the popular uprising against Muammar Gaddafi.
This month, striking oil workers in Gabon stopped the African country's estimated 240,000 barrels of daily crude oil production.
Many countries in the region including Yemen, Syria, Algeria, and Egypt are in turmoil, but the oil markets' real fear is civilian unrest spreading to Saudi Arabia.
Any shutdown at a Saudi oil producing facility, could well take oil prices past $150 a barrel in no time.
Crude oil rose to a 30-month high in New York on April 1 as the US added more jobs than forecast, signalling increased demand, and as fighting intensified in Libya.
Oil for May delivery climbed 1.1% to $107.94 a barrel on the New York Mercantile Exchange, the highest settlement since September 2008.
"The high price of oil — over $4 a gallon was the lynchpin of the last recession in the US. The average price per gallon now is about $3.57 and it's my expectation that the prices may cross $4 a gallon by the end of May, the beginning of the driving season in the US, which, in turn, could cause a slowdown in the US economic growth," said Dalton Garis, Associate Professor of Economics and Petroleum Market Behaviour at Abu Dhabi's Petroleum Institute.
The US is world's largest importer of crude oil. Any slowdown in US economic growth affects oil consumption patterns and has a direct bearing on the international oil prices. – Source: GulfNews.com