Obama: we can manage rising oil prices

President Barack Obama last night declared that the world can weather a spike in oil prices, as the price of crude went back on the rise again.

London brent crude shot up to nearly $120 a barrel yesterday until Saudi Arabia indicated it would pump more oil to cover shortfalls from Libya - a statement which triggered a rapid fall back. But this morning prices were back on the up, gaining $2.19 to $113.55.

Obama tried to calm nerves, declaring: "We actually think that we'll be able to ride out the Libya situation and it will stabilise."

Some economists calculate that every $10 increase in the world cost of oil per barrel can shave 1% off the US annual gross domestic product growth.

As oil spirals higher, South Korea, the world's fifth-biggest crude importer, today warned that its inflation situation was getting tougher.

Business executives fretted about rising prices and investment banks said oil was reaching an inflection point that could endanger the world's recovery from the global financial crisis.

But Obama's treasury secretary Tim Geithner also took a relaxed view, saying the world had plenty of oil reserves.

"We have substantial capacity across the major economies in the strategic reserves," he said.

"Hopefully, by reminding people of that and calling attention to the fact that there's a fair amount of excess capacity in parts of OPEC ... hopefully that will make it less likely the market ... starts to build in higher prices over time."