In Earlier days man needed Food, Air and Water for Survival but with
the Advent of Time and Technology another very Important Factor was
added to this list that is 'OIL'. The price of oil is of critical
importance to today's world economy, given that oil is the largest
internationally traded good, both in volume and value terms (creating
what some analysts have called a "hydrocarbon economy"). In addition,
the prices of energy-intensive goods and services are linked to energy
prices, of which oil makes up the single most important share. The
word petroleum has its roots in the Latin word oleum, which means oil
and the Greek word petra, which means Rock. As the price of oleum has
soared, the links between fear and petroleum become clear to
economists. Fears of heating-oil shortage this winter helped to push
the benchmark price of crude over $ 55 per barrel, which is a new
record. The spike in oil prices, up by over 60% since the start of the
year, is, in turn raising fears for the global recovery. Oil prices
have gone up by 30% in the past 12 months and are now well over the
$22-$28 target range set by the Opec (Organisation of the Petroleum
Exporting Countries) oil cartel. There are two benchmarks for world
oil prices. One is the Futures contract - an agreement for future
delivery at a specified time; place and price-for the US light crude.
The contract is widely used as a benchmark for determining crude oil
and refined product prices in the US and abroad. Brent crude oil is a
North Sea crude widely used to determine Crude oil prices in Europe
and other parts of the World. Together the light crude futures
contract and Brent crude are used as the basis for virtually every
physical crude oil transaction. The rule of thumb is that a $5
increase in the price of oil sustained over a one-year period lops
0.3% off global growth, according to the International Monetary Fund.
Opec agreed to lift production in June...