If Iraqi crude oil begins to flow into the market it can have a positive impact on the global economy that is already showing signs of retardation, External Affairs Minister Pranab Mukherjee said here on Wednesday.

He cautioned that oil prices are threatening to touch $150 per barrel and according to some experts could even reach $200 per barrel.

"It is important that the people of Iraq freely determine their political future and exercise control over their natural resources. Once this happens, perhaps an easing of the price burden could be expected," he said.

 "I believe that it would be helpful if Iraqi crude oil begins to flow once again to its full potential. Once the Iraqi oil is again in the market, the overall spin-offs are going to be large, not only for the global economy, but also for the Iraqi people."

He was speaking a function to launch a book, "The Ultimate Prize: Oil and Saddam's Iraq," written by India's former ambassador to that country, R S Kalha.

Referring to the steep hike in the oil prices, the minister said, "This massive volatility is already having a negative impact on the global economy and is likely to retard growth and development."

He justified the recent hike in the prices of petroleum products in India. "In the meanwhile, the government, faced with the present situation, found that there was no viable option but to increase oil product prices," he said.

"It is clear that the oil price hike is externally induced. It is not simply Indian economy that is bearing the brunt. The entire global economy is facing this crisis, with the developing countries taking on an unbearable burden."

The minister pointed out that Indian economy that was growing at over eight percent a year since 2003-04 needed to maintain this growth rate for the next 25 years in order to pull out a large number of people from poverty and to meet the country's developmental deficit.

"For this, we would have to increase our primary energy supply by three-four times and electricity generation capacity by five-six times. By 2031-32 power generation capacity would need to be increased to nearly 8,00,000 MW from the current capacity of around 1,60,000 MW," he added.

Mukherjee pointed out that the country's proven resources of fossil fuel along with the "renewables" and hydropower were inadequate to meet India's long-term energy needs.

Arguing in favour of expanding the country's energy basket, the minister said: "In my view, nuclear power appears to offer India the most potent means to realize its long-term energy security."