Rising demand from EM leading to high oil price :Fed

Posted By: Religare
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Rising demand from EM leading to high oil price :Fed
US Federal Reserve Board Chairman, Ben Bernanke said in a conference that the main reason for rising crude oil prices is the combined effect of falling supply of oil amidst rising tensions in West Asia and North Africa and increase in demand for oil mainly from emerging markets (EM).

Commenting on the issue he said, "In the United States, our demand for oil, our imports have actually been going down over time. So the demand is coming from a growing economy, where we've seen about a 25 per cent increase in emerging market output. “ and added that, "And on the supply side, as everybody knows who watches television, we're seeing disruptions in West Asia, North Africa, in Libya and in other places, that have constrained supply; that supply has not been made up; and that, in turn, has driven gas prices up quite significantly," Bernanke said.

Bernake said that although Fed is hoping that the gas prices will slow down in the near future, but mentioned that the Fed is concerned about the fact that oil prices are rising. He said that the main concern at present is to check that the rise in oil prices do not spread in the broader market thereby leading to higher wages and other commodities as it might impact economic growth.

Story first published: Friday, April 29, 2011, 9:30 [IST]
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