March 20th, 2012
06:31 AM GMT
(CNN) – Gas prices in China rose as much as 7% Tuesday, the biggest increase since 2009 to offset rising costs for oil refineries. In the U.S., drivers are seeing pump prices inching up, slowly approaching record highs not seen since July 2008.
As gas prices rise, due largely to fears that tensions with Iran will cut off supply, is oil set to become the new Greece?
The chief economist at HSBC thinks so. Much like worries of the eurozone debt woes could weigh on the global economy, now rising oil prices are attracting similar attention.
The good news: Oil prices fell Tuesday below $108 a barrel in Asia, after reaching nearly 10-month highs. Also Saudi Arabia took steps on Monday to increase oil exports to offset rising worries over Iran.
Still, there’s a sense that higher oil prices are inevitable.
“If you’re at $125, $130 or thereabouts, it’s enough to push headline inflation up, it’s enough to squeeze people’s real income and real wages, it’s enough to cause consumption to slow during the course of this year,” King said. Oil could trigger a global recession if it crests above $150, he added.
“There’s a lot of hope currently about a strong recovery, particularly in the U.S. there’s lot’s of expectations that perhaps the worst is over,” King said. “But with rising oil prices, (it could be) the case that perhaps things won’t be so good later this year.”