IEA Chief: $100 Oil 'Very, Very Bad' for Economy

02-23-2011 • CNBC.com

With oil prices rising sharply on the back of the crisis in Libya, the head of the International Energy Agency has warned crude prices hitting $100 a barrel could be bad news for economic growth. "That is our concern, regardless of the margins of disruption, if the $100 per barrel of oil is continued in 2011, the burden of oil to the global economy is as bad as 2008," Nobuo Tanaka, the Executive Director of the International Energy Agency told CNBC on the sidelines of a major oil conference in Riyadh. Nubuo's comments come amid escalating violence and protests in Libya. In a speech Tuesday, the nations' beseiged leader, Muammar Gaddafi, defied calls to step down, saying he would hold his post and die a martyr if necessary. Oil traders told Reuters Tuesday that the nation has declared a force majeure on oil exports. U.S. crude prices remained sharply elevated, trading more than 5 percent higher Tuesday. "2008 we remember is a huge economic crisis year. So … if the oil burden (we calculate by comparing oil expenditure divided by gross domestic product) moves up to 5 percent, it is really serious to the economic recovery," Tanaka added.