The price of oil has fallen to its lowest level in two months and in the US the cost of a barrel briefly dipped below the $50 mark. The latest drop followed OPEC’s promise to raise output again and a warning from the Group of Seven industrial nations about the threat posed to economic growth. North Sea Brent oil and US light crude are trading just above $50. Two weeks ago Brent was above $57 and in the US it was over $58. At its latest meeting the G-7 warned that oil represents “a headwind” to growth, and asked the Organization of Petroleum Exporting Countries to further boost output. German Finance Minister Hans Eichel said “high and volatile” prices “currently pose the biggest economic risk.”Part of the price hike is due to investors making speculative bets that prices will continue to rise, but they may lose out as oil reserves in the US are building and demand from China appears to be slowing. Meanwhile, the World Bank has expressed concern that rising oil prices are masking underlying economic weaknesses in the Middle East and North Africa. The Bank’s chief economist for the region, Mustapha Nabli, said economic growth has surged in the last two years, but it is mostly limited to Saudi Arabia, Iran, Algeria and the United Arab Emirates. And the lender said employment growth in the region is still too slow to meet the needs of its expanding labour force.
Oil prices hovering around $50