Europe faces new worries with rise in oil prices

Just as debt anxiety in Europe may be easing slightly the sharp rise in the price of oil creates new worries. If the prices rise too high they could very well impede any recovery in the EU economy.

Brent oil has risen a full 20 per cent since the middle of last December. Much of the rise is due to worry about supplies particularly since Iranian oil will no longer be imported. The Brent price set an all time high this week.

Although there has been a sharp rise in prices economists say that it is still not so high as to curb any recovery. Price now is about 123 dollars a barrel. This is below the cost last April of 127 dollars and far below the record high of 147 dollars a barrel in 2008.

Still the upward trend worries many. Julian Callow an economist said:"This comes at a difficult time for the euro area economy, which I would still characterize as being in a state of mild recession despite one or two more promising signs," "If we were to see a rapid, sudden escalation in the oil price, then for sure it would be a factor that would lead us to be revising down our projections for euro area growth and, if sustained, could make a mild recession turn into something more serious,"

He said that prices were already approaching the danger zone. Another analyst Andrew Milligan said that another 10 to 15 dollars rise a barrel was not too worrisome but if the price approaches 140 dollars a barrel and stays there this would threaten economic growth and profits for many firms. For much more see the full BNN article.