Oil prices on the international market are expected to drop moderately this year, one of China's major think tanks was quoted as saying Friday.

Li Xiangyang, deputy director of the Institute of World Economics and Politics with the Chinese Academy of Social Sciences, listed the slowdown of global economy, slower growth of demand for oil due to higher oil prices and increased oil output as major factors for his forecast.

Attention should be paid to the flow of international capital while keeping an eye on the fluctuation of the oil prices, Li was quoted by Shanghai Securities News as saying.

Historically speaking, oil-producing nations would accumulate large amounts of petro dollars during the past several rounds of oil crises, which produced a significant impact on global financial market, he said at a ceremony to launch a report on world economy during 2005 and 2006.

The current round of oil price hike has lasted for a relatively long period of time and the prices have risen by a big margin, resulting in large amounts of foreign exchange reserves in oil-producing nations, Li said.

The investment destination of those reserves will be the focal point of attention of the international financial circle, said Li.

Source: Xinhua