World Forum participants say rising oil prices are key source of instability

Saturday, May 15th 2004, 10:51 am

By: News On 6

SOUTHERN SHUNEH, Jordan (AP) _ Fluctuating oil prices should not cause alarm, but are a key source of global instability, participants at the World Economic Forum said Saturday.

Oil prices have soared, with the degenerating security situation in Iraq and a recent terror attack on a petrochemical facility in Saudi Arabia fueling the rise.

Lost production in Iraq, lower production in Nigeria and Venezuela and exploding demand from China have aggravated the situation, analysts said.

``We should be concerned, not alarmed, about oil prices,'' said Alan Larson, the U.S. undersecretary of state for economic affairs. ``Oil is available to meet the needs of the global community, but fluctuating prices is a source of concern.''

Augusto Lopez-Claros, chief economist and director of the Global Competitiveness Program in the World Economic Forum, said ``delays in restoring Iraq's oil production'' are of concern to the international community, as are fluctuating prices.

``Oil will remain a source of instability in the world, and perhaps in the short-term it is the most significant factor,'' Lopez-Claros said.

In South Korea, the president of the Asian Development Bank said surging oil prices could slow regional financial reforms. Still, Tadao Chino opened the ADB's annual meeting Saturday with optimistic forecasts for the region's developing nations, which were expected to grow by 6.8 percent this year and 6.7 percent next year.

On Thursday, oil prices soared on the New York Mercantile Exchange, crossing $41 a barrel and settling at the highest point in the 21-year history of crude futures trading in New York.