In the post-Iraq war scenario, while many experts expected the oil prices to fall, in reality, the prices have risen. How would this affect the global oil markets and the economy as a whole?Oil is one of the key ingredients of the global economic growth. Any drastic price movements in this commodity would cause the world economies tumble. Akin to other commodities, oil prices too respond to the imbalances between supply and demand. Then, what differentiates oil markets from other commodities? Unlike other commodities, supply of oil is not dependent just on the demand and price movements but notably, on the willingness of the suppliers to provide the product at the prevailing price which is not the case with many other sectors. The reason being, very few countries have the power to control supply. Going by this, something similar is happening in the global oil markets.

During the last quarter of 2003, the OPEC (Organization of Petroleum Exporting Countries) met at Algiers, to discuss the future plan of action, to contribute their best to control the excess supply by the member-countries and retain the oil prices from falling. At the end of the meeting, they decided to cut the production by one million Barrels Per Day (BPD). The decision would further fuel the oil prices towards north. The current oil prices (around $35 per barrel approximately) are at their highest levels in the post-war era. Any further increase in the oil prices would have a devastating effect on the global economy. If one looks at the chaotic situation in the global oil markets, in the near future, it is evident that oil prices are bound to stay high. In such a scenario, it would be a real test to the reviving global economy, which may be taken for a ride.