By Agency Reporter

The head of the International Monetary Fund has warned that global economic growth may suffer if the price of oil stays at its current high level for an extended period.

Oil prices jumped towards $120 a barrel last week for the first time since 2008, as a revolt against Libyan leader, Muammar Gaddafi, hit crude exports from the country, which is the world’s 12th largest producer.

“I am concerned,” said IMF Managing Director, Mr. Dominique Strauss-Kahn, during a visit to Panama.

“The hike, which is between $110 and $120 a barrel is something, which may affect (growth) if it lasts too long.”

At the same time, Strauss-Kahn said oil prices were not likely to hit growth yet. “We are not there today,” he said.

Nigeria, according to experts, will earn more during this period with the savings above the budget benchmark oil price going as high as $60 per barrel. The budget currently operates with last year’s $60 per barrel oil price benchmark.

Oil prices have eased in recent days, partly because top world exporter, Saudi Arabia, promised to meet any shortages.

Crude oil shipments from Libya were at a virtual standstill, shipping sources said.

Gaddafi’s forces have been trying for days to push back a revolt that has won over large parts of the military, ended his control over eastern Libya and is holding the government at bay in western cities near Tripoli.

Strauss-Kahn said Panama, seen as a safe bet for sovereign bond investors, could be included in the IMF’s safety net for emerging markets, known as the Flexible Credit Line.

 

Source: Punch