Costly oil failing India, China in inflation fight: IEA

High prices of crude oil may derail a nascent global economic recovery even as it would adversely affect growth in the emerging economies like India and China, the International Energy Agency (IEA) said today.

IEA said the tight money policies followed by both the Asian countries have had little effect in controlling run-away inflation as these countries have little or no control on oil prices.

Any failure of these Asian giants  - the two economies that helped the world overcome financial crisis - will further dampen prospects of global recovery, IEA said.

With prices of benchmark Brent crude touching $127 a barrel, a level which could even hurt demand for oil, IEA said the oil spike is sure to retard growth in fast growing emerging economies.

China and India continue to tighten monetary policies even as inflation levels stay put. Such a situation would slow down the two economies, which in turn will put global recovery at risk, IEA said.

Obviously, these two countries have an increased thirst for oil and any increase in oil prices also adds to the fuel subsidy bill of the two.