The European Commission today warned that a rise in crude oil prices to an average USD34 per barrel could reduce growth in the euro zone by 0.2 percentage points this year and next year. The latest Commission forecasts, which predicted an average 1.8pc growth in the eurozone, were based on the assumption of an average price of USD24 per barrel. Oil prices have been rising steadily as the prospect of a US-led war with Iraq grows and last month's general strike in Venezuela cut production levels. However, a strengthening of the euro is offsetting the impact of the crude price increase, which is also being tempered by a resumption of production by Venezuela, a Commission spokesman said.
Oil price rises "remain a concern" but are "compensated for to a certain extent by the increase" in the value of Europe's single currency, he said. At 2.30 pm, Brent crude oil for March delivery was up 17c at USD30.42 a barrel. //www.fxcentre.com