Oil prices have also been influenced by international incidents, such as terror actions and Hurricanes Katrina and Rita that resulted in extensive damage both to installations that produce crude oil and natural gas in the Gulf of Mexico and to refineries in the area. Last summer, North Sea oil prices (Brent Blend) generally ranged between USD 55-60 per barrel, and in August prices were approaching USD 70 per barrel. Oil futures have also increased. Since the beginning of October, oil prices have fallen back somewhat, and the price of North Sea oil has been below USD 55 per barrel for the past few days. The price fall primarily reflects slower growth in oil demand in many markets. This may be a sign that oil prices have reached a limit in terms of how high prices can be without having a noticeable impact on oil demand and other economic activity. Rising or persistently high oil prices may gradually dampen growth among our most important trading partners. The slowdown may occur gradually, and will not necessarily be particularly pronounced. It appears that high oil prices are resulting in somewhat higher consumer price inflation among several of our trading partners than assumed earlier. There are clear signs that consumer prices are increasing more rapidly in the US, the UK and to a certain extent in the euro area. So far, high energy prices have had a limited impact on other consumer prices. Core inflation in the US and the euro area has shown little increase so far.

Therefore, we should define ex-ante the exceptional circumstances under which the international community is ready to go beyond the normal lending limits. These conditions should include external debt sustainability, appropriate adjustment policy measures and the perspective of a quick return to financial markets. I also believe that exceptional procedures should be put in place when IMF access limits are to be breached. 4  BIS Review 62/2002  Second, procedures should be settled in order to limit the costs implied by unavoidable suspensions of payments. Indeed, these procedures should support the necessary informal dialogue between debtors and creditors prior to payment suspension and avoid the drawbacks of freezing market processes. Some instruments could help to achieve a timely and orderly process. A co-operative standstill mechanism would help to achieve a more timely and orderly rescheduling or restructuring process. For example, commonly agreed Guidelines or Best practices by debtors and creditors under the aegis of the IMF could ensure that such standstills be implemented. In addition to the appropriate domestic adjustment policy, such Guidelines could cover rules regarding, inter alia, transparency towards creditors, reasonable offers to creditors, comparable treatment of all creditors, seniority for “new money”, and a limited duration of the standstill. Obviously, a more extensive inclusion of collective action clauses (CACs) in debt contracts can greatly facilitate the negotiation of debt restructuring, by promoting agreement among creditors. Industrialised countries could contribute to this strategy by including CACs in their foreign debt issues, a step already made by EU countries.