Rising oil prices split APEC, may hurt Asia

Rising oil prices split APEC, may hurt Asia

BANDAR SERI BEGAWAN (Reuters): Soaring global crude oil prices
cast a shadow on a meeting of senior policy makers from Pacific
Rim nations as officials fear high energy costs could blunt the
stunning economic recovery in Asian economies.

"My own view is that the if the prices remain at this level it
does affect growth," Kunio Saito, IMF's director for Asia and the
Pacific, told Reuters.

Saito heads the International Monetary Fund delegation at the
two-day meeting in the oil-rich kingdom of Brunei of senior
finance ministry and central bank officials of the Asia-Pacific
Economic Cooperation (APEC) group.

Crude oil prices touched a 10-year high of $35.46 per barrel
on Thursday before falling back a little. The average price of
crude this year is $28.

"I think we are already seeing some of the consequences of the
high level of prices," New Zealand Finance Minister Michael
Cullen told reporters.

A senior World Bank official attending the meetings said if
crude oil prices remain at present levels, it could hurt growth
in the region and even impact economies untouched by the Asian
financial crisis in 1997-98.

"There are two types of risk. One is inflation and the other
is that it would cut off options (of growth) in many of these
economies," said Amar Bhattacharya, a senior adviser at the World
Bank.

"And if it does, then the decline will affect all economies,
not just the ones that were affected by the crisis."

He said some recovery in global crude oil prices, which
tumbled to 25-year lows of around $10 per barrel about two years
ago, was desirable but doubted if the current record high levels
were sustainable.

"It has benefited some APEC economies and probably some
recovery in oil prices was needed. But if it goes too high, the
sustainability of that price becomes questionable," he said.

Finance ministers from Pacific Rim nations gathering in Brunei
during the weekend are expected to debate the sensitive issue of
high oil prices ahead of a crucial production quota meeting of
the Organization of Petroleum Exporting Countries (OPEC) in
Vienna on Sunday.

"I have already expressed our concern about oil prices," said
Pakorn Malakul Na Ayutthaya, Thailand's deputy central bank
governor.

Officials said APEC was split on the issue of high global
crude oil prices.

"I suspect at this meeting there will be some divergence of
views between Brunei, Indonesia and Malaysia, who are net gainers
from (the) recent surge in oil prices and countries like Japan,
New Zealand and others who are suffering some consequences,"
Cullen said.

APEC members Brunei, Malaysia, Indonesia and Mexico are
significant oil exporters and are expected to oppose any move by
the regional grouping to urge OPEC to raise output in hopes the
higher supply brings lower prices, even though some members do
want to bring up the issue.