European Central Bank (ECB) President Jean-Claude Trichet warned on Wednesday that oil prices are likely to stay high for several months, but hurricane Katrina is not to blame.
"Oil prices have continued to rise, increasing considerably since the beginning of the year, and developments in futures prices suggest that market participants expect the current tightness in oil markets to persist," he told the economic affairs committee of the European Parliament.
Prices currently stand at around 64 US dollars a barrel after reaching a high of 71 dollars in the immediate aftermath of the US tragedy on Aug. 30, but current levels still represent huge gains historically, compared to just 45 dollars a barrel at the start of the year and 10 dollars a barrel in 1998. Trichet explained that the current spike is being caused by rapid demand growth rather than the hurricane which should have a "limited and temporary" global impact on supply.
"This is not a supply shock as we saw in the case of the first and second oil crisis in 1974 and 1980," the ECB president added.