Tight oil supplies could leave the global economy worryingly vulnerable for years to come, a senior IMF official said today.
Mr David Robinson, deputy director of the IMF's research department, said the relentless rise of oil prices meant the fund's recent forecast of 4.3 per cent global growth in 2005, published on September 29th, was already out of date.
Oil rallied 36 cents to $52.38 this morning on growing concerns that heating fuel supplies will prove inadequate during the northern winter.
But prices remain well below historic highs when adjusted for inflation. And given that the world economy is due to grow this year at its fastest clip in 30 years, Mr Robinson described the surge as "distinctly uncomfortable but still manageable".
He said he was more worried about oil supply bottlenecks, low inventories and, in particular, very low spare output capacity.
"This is perhaps the biggest concern right now and the biggest concern looking forward," Mr Robinson said.
"I do worry about the medium-term outlook, about the sustained vulnerability to oil prices."
Mr Robinson said it was significant that long-dated oil futures contracts had tracked spot prices higher. This reflected expectations that spare production capacity - which according to the International Energy Agency was down to around 1 million barrels per day from an historical average of 4 million bpd -- could not be increased quickly.
Mr Robinson said the resulting price crunch was a wake-up call for the US and other big oil consumers to accelerate energy-conservation steps and for oil producers to look more closely at the constraints on investment.
For Asia, rising oil prices posed a challenge in those countries where core inflation was picking up and some countries might need to respond by raising interest rates.
MR Robinson said India and China were among the countries where inflationary pressure was becoming a concern.
In China, where it was far from sure that the economy would glide to a soft landing, the central bank also needed to consider whether it had taken sufficient steps to dampen growth and inflation, Mr Robinson added.