World Economy Would Collapse If Oil Hit $200, Deutsche Says

By Shigeru Sato and Yuji Okada

June 25, Bloomberg

June 25 (Bloomberg) -- The global economy would collapse if oil hit $200 a barrel, said the top energy analyst at Germany's largest bank.

``Two-hundred dollar oil would break the back of the global economy,'' Deutsche Bank AG's Chief Energy Economist Adam Sieminski said in an interview today in Tokyo. ``Next step after $200 would be global recession and bad news for everybody.''

Sieminski's comments come after Goldman Sachs Group Inc. forecast oil may rise to between $150 and $200 within two years as supply growth, especially from producers outside the Organization of Petroleum Exporting Countries, fails to keep pace with demand. Deutsche Bank is due to release its oil-price forecast on June 27.

Oil doubled in the past year, touching a record $139.89 a barrel on June 16. Crude oil for August delivery was at $136.84 a barrel, down 16 cents, at 7:08 p.m. Tokyo time in after-hours trading on the New York Mercantile Exchange.

Russia, a non-OPEC producer and the world's biggest oil exporter after Saudi Arabia, faces its first annual decline in production in a decade. Prime Minister Vladimir Putin pledged to reduce taxation on the industry to stimulate investment in aging fields and new regions. Output fell 0.9 percent to 9.76 million barrels a day in the first five months of the year.

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photo: Fuel drips from the nozzle of a petrol pump at a gas station in Ilford, Essex, U.K., on April 3, 2008. Photographer: Chris Ratcliffe/Bloomberg News