In the present economic scenario, one of the important factors that determine the economic development of a country is the change in oil prices. The recent increase in oil prices can be attributed to the result of the relationship between demand, supply, and other speculative factors. The strong recovery of US economy and the rapid growth in Asia also increased the demand for oil and contributed to the surging oil prices. In this scenario, the article tries to determine the reasons for the mounting global oil prices.

The health and wealth of the world economy depends on the changes in oil prices. The current volatility in the prices is a result of geopolitical reasons and also sustained increase in demand coming mainly from China. The impact of higher oil prices on an economy would essentially depend on two factors: The quantum of imports of oil and oil intensity of the economies. Most of the emerging economies use oil intensive technologies, and hence are more affected than the industrial economies. It is, therefore, pertinent to know whether the current upward trend is a sustained increase or a mere glitch for that would determine the recovery of the world economy after a long recession.