Eurozone economic activity slumps to 31-month low in May

The eurozone composite purchasing managers' index (PMI) -- a key indicator of business activity -- fell to 47.5 in May, the lowest level in 31 months, according to data released in an S and P Global report on Thursday.

The report said that increased cost pressures have led to a contraction in business activities in the eurozone.

The service sector, a key pillar of the economy, took a heavy hit, with its PMI plunging to 46.4, a 63-month low.

Meanwhile, the manufacturing PMI stood at 51.4, suggesting the pace of expansion slowed to its weakest since January.

The report quoted Chris Williamson, chief business economist at S and P Global Market Intelligence, as saying that the preliminary PMI data for May showed the war in the Middle East has been weighing increasingly heavily on the eurozone economy.

The eurozone economy is expected to contract by 0.2 percent in the second quarter, while inflation could approach 4 percent in the coming months, according to Williamson.

International Energy Agency (IEA) Executive Director Fatih Birol warned on Thursday that the global oil market may enter a "red zone" in July and August this year, as fuel demand rise and stocks dwindle.

Birol noted that the supply crisis triggered by the situation in the Middle East was initially cushioned by spare capacity in the global oil market, but that oil stocks are now gradually decreasing.

The 32 members of the IEA on March 11 unanimously agreed to make 400 million barrels of oil from their emergency reserves available to the market in response to disruptions caused by the Middle East conflict.

The IEA stands ready to coordinate further reserve releases if necessary, Birol added.