Crude oil price has touched a record $137 a barrel and it is predicted that it will reach $200 in the near future, which is going to have a great impact on the lives of billions worldwide.

The escalating oil prices are hitting some parts of the economy harder than others. Economies with higher oil consumption levels have already been hurt and a further increase in the price of oil will only make matters worse. In the past one year, oil prices have shot up to around 50% since January 2007 to $137 a barrel driven by rising global demand and political instability in several oil producing countries. The peak oil (geological limits) and a global shortage taking center stage, speculators are betting that tight supplies or outright shortage will push prices even higher in the coming months.

On the other hand, oil companies are feeling a thorn in the profits because production costs have not increased as rapidly as market prices. The higher profits could help boost oil economies in regions where oil and natural gas are produced. However, the benefits will be more than offset by the negative effects of higher energy prices and have already begun to spill over into higher costs for a variety of products and services, including food prices worldwide.

For most central bankers and policy-makers, life is even more complicated as they are witnessing higher inflation. Higher oil prices are adding fuel to the fire for the Federal Reserve in the US as it has been slashing rates for nearly a year to try to offset the fallout from the housing slump and turmoil in the credit markets.

MBA Review Magazine, Higher Crude Prices, Credit Markets, Economist, Banking Industry, Global Banking Crisis, International Energy Agency, IEA, Economic Theory, Oil Industries, International Monetary Fund, IMF, Global Economy, Business Strategies.