By Kim Tae-gyu
Staff Reporter
Crude oil prices are feared to more than double this year from the trough of early last year, thus weighing on the recovery of Korea as the country does not produce a drop of the resource.
The Korea National Oil Corp. (KNOC) projected Sunday that oil values might rise to as high as $85 per barrel in 2010, or double that of early last year. The average price is also estimated at $74, up 20 percent from $61.6 in 2009.
Some experts even predict that the raw material, dubbed ``black gold,'' has a shot at being traded at beyond $100 per barrel this year should the dollar continue to lose ground.
The state-run KNOC picked the imbalance between the supply and demand of oil as the main culprit of causing the price upsurge.
``The economic rebound will prompt demand for oil to rise by 1.2 million barrels in 2010 from a year ago but exporters are expected to stick to their production ceilings,'' the KNOC said in its latest report.
``We need to keep an eye on advanced economies regarding when they will start exit plans from the expansionary policies. That is likely to affect oil prices to a large extent.''
Yet, the KNOC also raised the possibility that oil prices might stay similar to those of this year if the global economy suffers a double dip, a second recession after a short-lived recovery.
The forecasts of the KNOC are regarded as mild rather than radical because some pessimists have talked about prices of $100 a barrel.
Morgan Stanley predicted late last week that oil prices would reach $95 per barrel late 2010 before breaking through the $100 mark next year. President Lee Myung-bak has also been worried of late as to how the country will cope if oil prices top $100.
``The market consensus is that oil prices will not surpass the $100 milestone this year. Should the economy recover quickly, however, the values might hit three digits late 2010,'' Woori Investment & Securities researcher Lawrence Kim said.
``The weak dollar is also a significant variable on which we need to keep a tab. If the greenback keeps losing ground, the upward trend of oil prices is likely to accelerate down the road.''
Crude oil prices, which climbed to a record high of around $145 midway through 2008, plunged to about $40 early 2009 at the peak of the financial distress. But they have risen since then to move in the vicinity of $75.
Rocketing oil prices expose one of the biggest vulnerabilities of Asia's fourth-largest economy ― when they soar by $25 a barrel, the energy-hungry exporter is required to pay an additional $10 billion a year.