London: Asian economies could play a key role in avoiding a global recession, according to researchers at Clarkson. The last time oil prices doubled in 1979, the result was a world recession that lasted years. There are both similarities and important differences this time round, however, say the analysts. In 1979 the price of oil more than doubled from $14 to $36, equivalent today to a rise from $44 a barrel to $93. So this year's hike - from $72 to $140 is more severe.
In 1978, world GDP was growing at 4.7% but by 1982 the growth rate had slumped to just 1.2%. Simultaneously oil demand fell and short-haul crude oil shipments rose, thus taking a heavy toll on the tanker market. Crude tanker trade fell by about 40%.This time, the world economy has been growing at more than 5% and certainly US oil demand fell sharply in the first quarter of this year. However, the analysts point out that short-haul oil production is actually falling this time round, and another key difference is the strength of what Clarkson terms the "non OECD economy".
Demand growth amongst the "globalising importers" - including China, Asia generally, South America and Africa - is steadily rising. In contrast, oil demand in the North Atlantic economies - North America and Europe - is edging down. Meanwhile in developing countries, demand is increasing by more than one million barrels a day per year. In a recent analysis by the International Energy Agency which assumed a crude oil price of $110, the global economy suffers only a minor blip in 2009, with GDP falling to 3.8% before climbing again to 5% in 2010. And the decline in short-haul oil movements should mean that tanker demand will remain strong. [21/7/08]
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