London, 3 February 2011

Crude oil prices of $100 will cause little "destruction" to the world economy despite a boost to inflation, especially in Europe, which could drag on recovery, IEA Chief Economist Fatih Birol has told Reuters Insider. "I don't see much destruction to the world economy from the current high oil prices," Birol said in an interview on Wednesday.

"I hope the oil prices will be lower than the current three digits by the year-end." The IEA said last month the world's second largest oil producer, Saudi Arabia, had boosted supply on the sly to cool the rally.

The Paris-based agency has been soothing consumers with assurances that high crude stocks around the world will help the market absorb shocks.

Birol reiterated IEA head Nobuo Tanaka's assertion that unrest in Egypt would not cause a supply crisis and dismissed the prospect of disruptions to tanker traffic through the Suez Canal, a key shipping channel from the Middle East to the Mediterranean.

"As far as we know, there is no significant major supply threat to the oil supply in the Suez Canal," Birol said. "Even if there is a vast emergency situation the International Energy Agency has lots of stocks to release, lots of inventories for the time being. I don't see a major problem for the time being."

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