Skyrocketing Oil Prices Hamper Growth

The Korea National Oil Corporation announced yesterday that the price of West Texas Intermediate for July delivery increased $4.19 from a day ago to close at $133.17 per barrel, shattering all the previous records Wednesday at the New York Mercantile Exchange. The spot price for WTI increased $3.47 to reach $132.56 per barrel for the day.

Dubai crude, Korea’s benchmark, also jumped $3.29 to a new high of $123.69 per barrel.

This means a 30.5 percent increase in the WTI spot price and a 26.7 percent increase in Dubai crude from late March. Recently, U.S.-based investment bank Goldman Sachs even warned that international oil prices would reach $200 per barrel by 2010.

Surging oil prices have raised consumer prices across the world and contracted real economies, resulting in the global economic slowdown. According to the minutes of April’s regular meeting of the Federal Open Market Committee, the Federal Reserve Board has adjusted its forecast for U.S. economic growth to 0.3-1.2 percent this year, 1 percentage point lower than its original forecast of 1.3-2 percent in January.

Global stock markets also crashed. Korea’s benchmark KOSPI fell 12.09 points (0.65 percent) to close at 1,835.42 yesterday. After losing for four straight days, the index has managed to exceed the 1,800-point mark.

Other Asian markets have also tumbled. China’s Shanghai Composite Index fell 1.65 percent yesterday. On Wednesday, the United States’ Dow Jones Industrial Average and its tech-heavy NASDAQ index dropped 1.77 percent, respectively.

According to Opinet, a KNOC Web site providing information on oil prices, a gas station in Yeouido, Seoul sold general unleaded gasoline for 2,025 won per liter yesterday. In southern Seoul, seven gas stations sold regular gasoline for more than 2,000 won per liter.

A gas station in the Gangnam area of southern Seoul sold diesel oil for 1,999 won per liter, close to 2,000 won. In the same district, 19 gas stations in the area charge more than 1,950 won per liter of diesel oil.

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