Record Oil Price Close To A Slump

The current international oil price hiking trend is just a bubble, which is expected to burst soon, Shen Siwei, a Chinese analyst, supposes.

The current international oil price is 500 percent of the price in December 1998, $11 per barrel.

Siwei, the associate professor with the Shanghai Jiaotong University, said in his article, that only a bubble effect can explain the rocketing oil price.
He attributed this to a series of speculative activities in the international market.

Whenever the international price of crude oil increases by 10 US dollars per barrel, the growth rate of the world economy will drops 0.5 percentage points, Shen quoted a British study as saying, expecting world economic growth to slow down in the near future due to rising oil prices.

The rocketing international oil price will inevitably lead to global inflation, which most people will not be able to withstand, he said.

Whenever the price of a product soars it is close to a slump, he said in his article. If the international oil price continues to go up, the United States, rather than other countries, will suffer the most, he said.