WASHINGTON: Higher oil prices should have a limited impact on the world economy if prices stay at current levels, the International Monetary Fund said Friday. “The increase by some $10 per barrel since mid-January has reflected increased oil supply risks due to events in the Middle East and North Africa, but current market pricing suggests that this will be mostly a temporary price shock,” an IMF spokesman told Reuters. However, if prices continue to rise due to further supply disruptions the impact to global growth “could become appreciable,” the spokesman said, adding, “but that is not our, or the markets' expectation.” Still, the IMF said the effect on global growth of increased oil supply risks was hard to predict. Brent crude held above $111 a barrel but below 2-1/2-year highs Friday after Saudi Arabia raised output to calm fears of supply disruptions due to increasing turmoil in Libya. In London, Brent futures for April closed up 78 cents at $112.14 a barrel, the highest weekly settlement since Aug. 21, 2008. They peaked at $113.91, below Thursday's high of $119.79, the loftiest intraday since August 2008. US April crude futures settled up 60 cents at $97.88, the highest weekly close since September 2008, and reached $99.20 earlier. Popular uprisings have spread across the Middle East and North Africa since early this year, toppling rulers in Tunisia and Egypt. The Organization of the Petroleum Exporting Countries has resisted calls for a formal increase in output and does not plan to meet until June. The IMF noted that spare capacity in OPEC producers not affected by political unrest was larger than recent production in countries hit by protests. The IMF spokesman noted that much of the increase in oil prices through early January reflected increasing global demand as the world economy recovers from the financial crisis. The IMF has said a two-speed recovery in the world economy is under way. In January, the IMF forecast that global growth would reach 4.4. percent this year, rising to 4.5 percent in 2012. The IMF raised its baseline forecast for 2011 oil prices to $94.75 a barrel from $89.50, according to a document submitted to G20 ministers meeting in Paris last week. “If the price surge unwinds soon, as markets currently expect, the damage to global activity will be very small,” the spokesman said. “If prices stay where they are, there would be some limited losses,” he added. Production at the eastern Libyan oilfields of Misla, Sarir and Nafoora has been cut by more than half, and the fields are being jointly secured by workers and the army, an oilfield manager said Saturday. Many of Libya's key oil producing areas and terminals are located in the east of the OPEC member state, large chunks of which have fallen to rebels seeking to oust leader Muammar Gaddafi. “We have cut production to a minimum, well below half our normal production of 100,000 barrels a day, although I cannot give more details for security reasons,” said an oilfield manager called Hossam, who works at Misla oilfield 400 km (250 miles) south of Benghazi. He declined to give his full name.
