Mid-East unrest raises fears of second recession
Sydney Morning Herald
Friday March 4, 2011
FEARS of a double-dip recession in Europe and a shattering of global recovery loomed as oil prices climbed closer to levels not seen since the financial crisis.West Texas Intermediate crude rose $US2.60 to $US102.23 a barrel on Wednesday night, its highest since September 2008.The Asia-Pacific benchmark, Tapis crude, rose $US3.68 to $US118.44 - 29.9 per cent above the average for 2010. It has risen 14.4 per cent since turmoil in the Middle East erupted at the start of last month.Equity markets across the Arab world fell further. Saudi Arabia's benchmark index fell 3.9 per cent to its lowest level since April 2008. Investors fear unrest will escalate among the Muslim kingdom's Shiite minority, destabilising the world's biggest oil producer.Nouriel Roubini, an economist who predicted the financial crisis, said an expansion of troubles in the Middle East could drive oil prices as high as $US150 a barrel, and that could trigger a double-dip recession in parts of Europe.The chairman of the US Federal Reserve, Ben Bernanke, said a prolonged increase in oil prices could threaten economic recovery but he forecast only a temporary increase in inflation.On the Australian market the ASX 200 Index rose 3.2 points, or 0.07 per cent, to 4806.4 yesterday. The broader All Ordinaries rose 4.5 points to 4902.8. Both had fallen steadily since protests in oil-rich Libya began two weeks ago, losing 130 points, or 2.6 per cent.The IG Markets strategist Ben Potter said investors would continue to be jittery as long as oil prices remained high, even though some economic data from developed countries was positive."Participants are being cautious in response to the current geopolitical concerns in the Middle East and their subsequent impact on oil prices," he said.The energy and materials sectors were the top performers yesterday, both rising 0.6 per cent.BHP Billiton rose 50 to $46.55 and Rio Tinto rose 8 to $84.20. Woodside Petroleum rose 55 to $43.18 and the oil and natural gas explorer AWE rose 10.5, or 6.46 per cent, to $1.73.Gold fell $US2.78 to $US1434.28 an ounce after hitting a record high of $US1440.32 early yesterday.
© 2011 Sydney Morning Herald