According to a research report by Vadilal Forex, Asia is braising for the impact of oil prices at nine-year highs amid fears they could go even higher.Key global producer Saudi Arabia, Venezuela and Mexico said on Wednesday they had no intention of relaxing a production cutback during the key demand period for the next few months. The pact cut output by almost five million barrel per day (BPD). Asia consumes 19 million BPD and needs to import 12 million BPD making it vulnerable to oil. It is worth noting that India consumes 1.8 million per day, most of the supply met through imports.

In the wake of rising crude prices, government may hike diesel prices again, it is feared. According to the report, the global oil stocks are falling so fast that oil prices could risemuch further in the months ahead.

The London based Centre for Global Energy Studies said that unless the OPEC relaxes production cuts, oil could hit $35 a barrel by the fourth quarter of 2000. US data showed gasoline stocks at two- year lows, while oil stocks at Singapore the pivotal export centre also show two- year low. Though the European crude stocks remain above the 1997 level.

However OPEC has said that it wants to drive stocks to the level of 1996 or 1997 to balance the market could help prices to stay firm, the report added The report goes saying that the inability of Japan oil firms to pass on rising costs of crude oil by raising retail prices is weighing heavily on the industry. The fresh bull run in the crude oil could generalise Asian economies which has been just coming out of currency crisis. The Thailand which imports 70,000 BPD crude just hiked diesel prices by almost two per cent. Another Asian economy Philippines is also under pressure. Though the market is deregulated, the price risein the past have prompted public demonstrations and strikes among transport workers.

The rally also poses a threat to the Indian economy which is showing signs of robust growth. Though the prices dipped below the $26 level on Thursday, the sentiment is likely to remain bullish as winter demand may cause temporary shutdowns.