Oil prices are back to haunt the world economy and to dent the recovery that is ﬁnally on the right track after some earlier disappointments. Over recent months they have climbed to levels that most economists had thought impossible just six months ago. Brent oil prices surged by about 18 percent between July and August, reaching $45.15 per barrel on August 20.
This was the highest level since the extremely low prices following military operations in Iraq in April last year. Indeed, between March and April last year Brent prices dropped from $30.3 per barrel to $24.9. The current level is about $5 a barrel higher than at the beginning of June when the Organisation of the Petroleum Exporting Countries (OPEC) raised its overall output quota – excluding Iraq – by 2 million barrels per day to 25.5 million from July.