Economy to suffer as oil heads towards $100 a barrel. (UK)

Continued pressure from the price of oil could eventually hit the economy, say fund managers, as falling reserves and increased demand are likely to push the price to $100 a barrel in 2006.

Tim Walker, manager of the Martin Currie portfolio investment trust, says even though the cost of oil could eventually affect inflation, the growth potential of businesses and the economy, as well as oil distributors, he continues to favour investment in oil companies as the dividend and share price potential is strong on the back of a climbing oil price.