PARIS (MNI) – A disruption of oil shipments through the Suez canal
would likely encourage OPEC to produce more crude in order to counter a
spike in prices, French Finance Minister Christine Lagarde reasoned
Tuesday.
“If the shipments through the Suez Canal — about a million barrels
per day — or the southern Mediterranean pipeline were blocked in some
way, which is not the case today, and that should last, it would clearly
weigh on the price of oil,” the minister acknowledged in a radio
interview.
“In this case, I believe that OPEC would be very careful to take
measures to avoid the risk of shortages and to supply the market, as we
supplied financial markets with liquidity when there was a risk,” she
added.
Noting that the barrel price had already surpassed the $100 level,
Lagarde said, “All experts agree that it will fall back again if things
calm down in Egypt, especially if there is no danger for shipping, both
through the canal and the pipeline.”
Lagarde also played down the risks that global imbalances pose for
the economy, as highlighted by IMF Director Dominique Strauss-Kahn.
“First of all, I’m not pessimistic by nature and also don’t think that
it is especially useful to ‘cry wolf’ in Singapore,” she said.
“Clearly there are a number of risks,” she conceded. “That’s always
the case in a globalized economy. What do you expect?”
“There are also responses to dangers,” she said, referring again to
the likely reaction of OPEC.
Lagarde ruled out any hike in value-added taxes to reduce France’s
budget deficit, as proposed by a leading member of her government: “In a
period of recovery, which we want to consolidate, I do not wish for the
rise in consumer prices for the economy which would result directly from
a hike in the VAT.”
–Paris newsroom +331 4271 5540; e-mail: stephen@marketnews.com
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