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Opinion: Why Have Oil Prices Been Spiking This Year?

A motorist fills up his gas tank at a service station in Shanghai on April 26. Photo: VCG
A motorist fills up his gas tank at a service station in Shanghai on April 26. Photo: VCG

Recently, a major oil benchmark price (Brent) was up over 100% since early 2016 at $75 a barrel and was the highest price since the spring of 2014, when oil exceeded $100 a barrel. What explains the sharp rise, which will harm all oil-consuming economies? And is it on its way back to over $100 a barrel again (as the oil-exporting countries hope)?

Nothing is certain about the market for oil, which has had ups and downs since its beginnings in the late 19th century. One strong upward pressure on oil prices is the most buoyant world economy in over a decade. The International Monetary Fund (IMF) presented its semi-annual world economic outlook during the meetings of IMF governors in Washington last month, and for the second time revised their forecast upward for the next few years, to 3.9% for 2018 and again for 2019. Europe and Japan have picked up speed, as have a number of emerging markets.

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