BRUSSELS, Jan. 3 (Xinhua) -- The European Union (EU) ushered in the new year in an uneasy mood on Thursday after world oil prices touched 100 U.S. dollars a barrel one day ago.
"If this high level of (oil) prices maintain its way, it will have an impact on the (European) economy," Amelia Torres, EU spokeswoman for economic and monetary affairs, warned at the first daily briefing of 2008 after week-long Christmas and new year vacation.
In New York, crude oil futures set a record close Wednesday, the first trading day of year 2008, after briefly hit the psychologically important mark of 100 U.S. dollars a barrel on concerns of tight supply and weak U.S. dollar, which analysts fear may hurt the world economy.
However, Torres declined to specify how the recent oil price move would affect the outlook of the European economy.
At the latest monthly meeting of EU finance ministers earlier December, EU Economic and Monetary Affairs Commissioner Joaquin Almunia suggested economic growth in the euro zone may slow more than forecast by the European Commission and drop below two percent in 2008 for the first time in three years, due to new developments in the oil markets and persistent financial turbulence.
"We are facing downside risks for our growth scenario," Almunia said at that time. "With the present information our forecast would have lower figures for growth."
In its annual autumn forecast released in November, the commission expected the economic growth in the euro zone to be 2.2percent in 2008, which had already been revised down from 2.5 percent under a previous forecast.
Acknowledging Almunia's remarks before Christmas were valid, Torres failed to say whether that means the soaring oil prices would bring down Europe's economic growth further.
In its autumn economic forecast, the European Commission already cited high oil prices as one of the major risks to the European economy, warning more expensive oil could make Europeans more reluctant to spend and drive prices up.
Weaker private consumption may reduce the momentum of European economic growth.
Meanwhile, official figures showed that the eurozone annual inflation in November shot up to 3.1 percent, the highest level in six and a half years and well above the 2 percent ceiling preferred by the ECB to maintain price stability, mainly due to soaring food prices and record-high oil prices.
European Central Bank (ECB) president Jean-Claude Trichet told the European Parliament two weeks ago that Europe was likely to face a longer period of high inflation than previously expected.
Tichet said the inflation rate was expected to remain significantly above 2 percent in the near future, and it was likely to moderate only gradually in the course of 2008.
What matters is the high inflation, boosted by oil prices, has thrown the ECB into a dilemma as to whether to raise its eurozone benchmark interest rate to maintain price stability amid the financial turmoil since last summer.
Any further increase might be detrimental to the economy which was already hurt by the volatility on the financial markets, triggered by the U.S. sub-prime mortgage market crisis.
Analysts are saying oil prices, which have nearly tripled since2003, still have the potential to rise further.
Despite worries mounting ahead, Torres said the record-high oil prices could to certain extend be offset by the continuous appreciation of the euro against the U.S. dollar.
For European consumers, their gas bill did not increase as quickly as the world oil prices, thanks to a strong euro, since most of their imported oil was paid in U.S. dollars.
"The present strength of the euro has protected us. Of course, the appreciation of the euro may present problems for European exporters, but ... protect us from high oil prices, which are in general in dollars," Torres said, "If the euro appreciates against the dollar, that obviously brings down the bill for oil."
