United Nations

NEW YORK, 8 September (UN Headquarters) -- The following statement was issued today by the Office of the Spokesman for Secretary-General Kofi Annan:

The Secretary-General is concerned at the potential impact of high oil prices on the world economy.  The oil price increase has relieved the financial pressures in major oil exporting countries.  But the potential of a serious impact on inflation and interest rates in major importing countries remains.  In the past, sharp increases in oil prices have triggered recessions that hurt all countries including the oil exporters.

The Secretary-General is particularly concerned about the adverse effects on oil importing developing countries.  Many are only just recovering from the blows of the recent financial crisis.  They have seen the first signs of recovery which could easily be jeopardized by the negative impact of higher oil bills.

Developing countries are less able to substitute oil by other energy sources and smaller technological and financial capacity to introduce energy efficient processes.  The increasing burden would result in balance of payment problems and a reduction in other imports and spending.  The poorer segments of the developing countries will be hardest hit with an attendant rise in price of other essential goods such as fuel, food and transport.

Major oil producers have demonstrated their willingness to look at oil prices and related supply/demand issues in a long-term context.  The Secretary-General urges them to be especially sensitive to the impact of their decisions on the world economy and particularly the poorest countries.