PARIS, 30 July 2004 — The recent surge in the price of oil has once again raised the specter of an economic slowdown, in particular in the United States, but its impact has divided economists who say a critical factor is the length of time the price remains high.

Oil prices eased back from record high levels yesterday after Russia’s Justice Ministry said embattled oil giant Yukos could continue oil production and sales.

But despite this traders remained nervous about the risk of disruption to supplies from Russia, whose oil is seen as crucial for the world’s future energy needs.

On Wednesday New York’s light sweet crude for delivery in September hit an unprecedented $43.05 a barrel and set a record finish of $42.90, up $1.06 on the day.

According to Nigel Pain, an economist at the Organization for Economic Cooperation and Development (OECD) in Paris, this is not good news when the world economy is in a recovery phase.

However, he said if the rise was temporary it would be manageable and unlikely to derail the world economy.

“It would nevertheless be different if prices were to remain stuck above the $40 (a barrel) mark,” he cautioned.

Much may depend on whether prices, which are partly dependent on rumors about the state of Yukos and the speculation swirling around the company, will flatten in the coming months or whether the strength of world demand, notably in China, will help keep them high.

Economists like Antoine Brunet, head strategist at HSBC-CCF, said the high rate could continue. It may not resemble a full-blown crisis as in the mid-1970s but rather a long, drawn-out trend “perhaps up to $50 (a barrel) for 2005,” he said.

High oil prices are helping to reduce consumers’ purchasing power and company profits and are encouraging central banks to raise interest rates, all of which handicap growth.

The consequences of this on the world’s major consuming countries vary. The euro zone, where growth is already lower than elsewhere, “is partly protected at present by the strength of the euro against the dollar,” says Anne Beaudu, an economist at French bank Credit Agricole.

Asian countries, despite their dependence on oil imports to satisfy their huge energy demands, can sustain the pressure better thanks to their considerable exchange reserves and their trade surpluses.