(AFP) A top economic official expressed fears that the current weak oil prices will harm the economies of many oil exporting countries, including Malaysia.

Mustapha Muhamad, executive director of the think-tank unit National Economic Action Council, set up to revitalise the economy said that the reasonable price band for oil was US$20 a barrel.

"Prices from our point of view, US$20 per barrel will be right," he told AFP late yesterday.

Mustapha said a price below US$20 "will do a lot of harm to many countries, including Malaysia."

Excise duties and other forms of taxes on oil form an important source of revenue for the government, he said. "Hopefully the fall will only be temporary."

Oil prices have fallen dramatically as major world crude producers have chosen to chase market share rather than price stability at a time when a supply glut is swamping a market undermined by falling demand.

The price of crude oil on world market has fallen below the crucial US$20 a barrel level, sparking fears that it might plunge to US$15.

Adversely affected

Since the Sept 11 terror attacks on the US, the price of Brent crude - a key benchmark - had fallen US$11.55, from US$28.87 to US$17.32 per barrel Friday.

Malaysia's Tapis oil had plunged 30 percent to 18.50 from 26.86 during the same period.

Mustapha said while the ailing world economy would gain in general from lower prices, too low a price would spark other problems.

"The world is not comprised of America and consumers alone. Oil producing countries will be adversely affected," he warned.

Asked if saw a potential upward rise in oil price in the near future, he said: "Hopefully it will not be too long. The prevailing conflict in Afghanistan was affecting business confidence.

"When people start to travel, investments will pick-up, naturally oil prices will go up," he said.

Malaysia registered a 3.1-percent growth rate in the first quarter this year and 0.5 percent in the second quarter.

The government this month revised downwards its 2001 GDP growth forecast to 1.0-2.0 percent because of the "greater-than-expected" slowdown in the world economy after strong expansion of 8.3 percent in 2000.