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![India's government, which imports 70 per cent of its oil, has cut back on fuel subsidies [AFP]](http://mwcnews.net/images/stories/Economy/1/2/3/4/5/6/7/oil-prices-02B.jpg "India's government, which imports 70 per cent of its oil, has cut back on fuel subsidies [AFP]") | | India's government, which imports 70 per cent of its oil, has cut back on fuel subsidies [AFP] |
Fuel costs have continued to rise around the world, with US oil topping $130 a barrel after its biggest ever one-day spike.
Meanwhile, many goverments have had to cut their fuel subsidies, sparking widespread protest. Including gains in the previous floor session, oil prices were $8 a barrel higher on Friday than at the middle of the week.
Marc Lansonneur, Societe Generale's head of commodities derivatives in Asia, said: "If oil continues to rise, it could test $135 or $140. "The market is in a state of uncertainty after such a move."
Since last year, the price of a barrel of oil has nearly doubled in rises attributed to a weakend US dollar and increasing demand - leading to riots, protests and panic-buying in many parts of the world.
Consumers are suffering as a result - not only from the fuel price hike, but also from the knock on affect of rising food costs, electricity bills and spiralling inflation. Oil prices have, however, fallen slightly since May, when they hit record levels of about $135 a barrel. Some analysts predict a further drop as a result of steps taken by Asian governments.
John Kilduff at MF Global brokerage firm, said: "Demand is now fully the focus of market participants. The demand stalwart, Asia, is finally buckling, as emerging economies in the region are cutting fuel subsidies."
Slashed subsidies
India's government, which imports 70 per cent of its oil, cut fuel subsidies earlier in the week, causing an 11 per cent petrol rise.
Strikes and protests against the government decision have spread across India, paralysing transport in two key states and hitting businesses in Hyderabad and Kolkata on Friday.
Thousands of people demonstrated in Mumbai a day earlier, venting anger as well at costs increases of gas and food. World petrol prices The price drivers pay for petrol per litre varies wildly around the world: Turkey: $2.68
UK: $2.26
Hong Kong: $1.99
Brazil: $1.56
Pakistan: $1.06
US: $1.05
Saudi Arabia: $0.12
Venezuela: $0.05
After a chaotic rush by drivers to fill up on the last of the subsidised fuel, police in the capital Kuala Lumpur are now bracing for a backlash from angry protesters.
In Indonesia, small businessmen are feeling the pinch.
Despite widespread protests, costs have soared by 30 per cent in the last few weeks.
The government scrapped expensive fuel subsidies it said would be better spent on education and development. The country is also pulling out of OPEC, the oil exporters' cartel, because it cannot produce enough oil to export.
In Europe, fishermen, farmers and lorry drivers are holding massive protests over the rising prices.
Action in Belgium turned violent when riot police charged fishermen on Wednesday after rocks and firecrackers were hurled across the barricades.
High fuel prices have also hit global airlines.
US carrier Continental Airlines announced on Thursday 3,000 job cuts and the halting of service for 67 ageing planes because of rising fuel prices.
Two other big carriers, American and United Airlines, have made similar moves.Alternative measures
Some analysts say subsidy cuts in Asia will not be enough to curtail demand.Harry Tchilinguirian, oil analyst at BNP Paribas, said: "World oil demand growth is still accounted mostly by China, the Middle East and Latin America - and through the summer, there is no reason to expect a material slowdown in demand growth in these areas."
The International Energy Agency warned on Friday that oil demand would rise by 70 per cent if governments continued with their current policies.
World governments must start a $45 trillion "energy technology revolution" or risk a 130 per cent surge in carbon emissions by 2050, the consumer watchdog said.
Choo, of Malaysia's Noordin Sopiee and Associates group, said biofuels and public transport systems are the most viable options for reducing demand. "But [change] takes active government involvement", she said. "We can't leave it to the private sector."
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