he world is in the grip of an oil price shock. In just a few months, prices have risen from US $65 a barrel to over $130, causing fuel costs to surge, inflationary pressure to rise and consumer tempers to flare. Even before Russia's invasion of Ukraine, prices were climbing rapidly because of roaring demand and limited supply growth.
Price shocks aren't new. Viewed historically, they are an integral part of oil market dynamics, not anomalies. They have occurred since the birth of the industry.
Many factors can trigger oil price shocks. They include large shifts in either demand or supply anywhere in the world, since oil is a global commodity. Shocks can also result from war and revolution; periods of rapid economic growth in major importing nations; and domestic problems in supplier countries, such as political conflict or lack of investment in the oil industry. Overall, the worst spikes have combined two or more of these factors – and that's the situation today.
