Bloomberg News

Oil-Price Rise May Be ‘Negative’ for U.S., MKM’s Darda Says

February 24, 2012

Feb. 24 (Bloomberg) -- A bigger jump in oil prices, driven higher by tensions with Iran that are threatening supplies, may hurt U.S. economic growth, said Michael Darda, chief economist at MKM Partners LP.

“A supply shock is a negative,” whereas price gains caused by a pickup in demand would be less of a concern, Darda said today in an interview with Kathleen Hays on Bloomberg Radio’s “The Hays Advantage.” He said “this is mostly a supply shock” that may reduce economic growth by “a couple of tenths” of a percentage point.

Recent reports have shown the economy is improving, and gains in labor-market data “may be more sustainable” than many economists predict, said Darda, who is based in Stamford, Connecticut. It is also a “reasonable” concern that the expansion is “fragile,” he said.

Oil climbed for a seventh day, the longest streak of advances since January 2010. Crude oil for April delivery rose $1.26, or 1.2 percent, to $109.09 a barrel at 1:03 p.m. on the New York Mercantile Exchange. The contract reached $109.16, the highest level since May 5.

“It’s not going to be a make-or-break situation at these levels,” Darda said. If further shocks result in oil prices that are almost double, “then all bets are off,” he said. “It would just depend on where we go from here.”

--Editors: Christopher Wellisz, Kevin Costelloe

To contact the reporters on this story: Shobhana Chandra in Washington at schandra1@bloomberg.net; Kathleen Hays in New York at khays4@bloomberg.net

To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net


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