Costly oil could place a major strain on consumer countries with fragile economies, OPEC ministers have said, in their clearest statements yet that they believe fuel demand has shrunk.
Leading OPEC member Saudi Arabia confirmed yesterday that the kingdom had cut output by more than 800,000 barrels per day (bpd) in March because of weak demand.
Saudi Oil Minister Ali al-Naimi said economic recovery was still weak in some countries.
"The recovery remains patchy; in many countries unemployment remains at unacceptable levels," Naimi told a meeting of Middle Eastern and Asian energy officials in Kuwait.
Brent crude earlier this month rose above $127 (£77.80) a barrel, its highest level in more than two and a half years.
It has since fallen towards $121, with yesterday's sell-off attributed in part to Saudi Arabia's comment on demand.
"At these high price levels, spending on oil imports could represent a significant economic burden for many import-dependent countries," Kuwait Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said in a speech at the meeting.
Consuming nations were the first to say the oil price is high enough to erode demand for fuel and knock back economic growth.
Nobuo Tanaka, executive director of the International Energy Agency, today reiterated comment that if oil prices remained around current levels, they could trigger a recession similar to the one begun in 2008, when oil prices hit a record of nearly $150 a barrel before collapsing to less than $40.
"Already we are seeing some indication of the slowdown in demand, and it's alarming," Tanaka told Reuters.
City A.M. Reporter