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Expert Predicts International Oil Price Slump

Posted on: Tuesday, 16 August 2005, 09:01 CDT

Expert predicts international oil price slump

BEIJING, Aug. 15 (Xinhua) -- The current international oil price hiking trend is just a bubble, which is expected to burst soon, Shen Siwei, associate professor with the Shanghai Jiaotong University said in an article published by Shanghai Securities News recently.

The current international oil price is 500 percent of the price in December 1998, 11 US dollars per barrel, said Shen.

Only a bubble effect can explain the rocketing oil price, he said, attributing this to a series of speculative activities in the international market.

Whenever the international price of crude oil increases by 10 US dollars per barrel, the growth rate of the world economy will drops 0.5 percentage points, Shen quoted a British study as saying, expecting world economic growth to slow down in the near future due to rising oil prices.

The rocketing international oil price will inevitably lead to global inflation, which most people will not be able to withstand, he said.

Whenever the price of a product soars it is close to a slump, he said in his article. If the international oil price continues to go up, the United States, rather than other countries, will suffer the most, he said.

Even if some interest groups in the United States wish to further lift up the oil price, the US public will strongly oppose them, suggesting that the price bubble is close to exploding, he said.

Source: Xinhua News Agency - CEIS

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