Oil prices reach record high

World oil prices have reached a record high this week after New York crude prices reached $78.77 per barrel following an announcement of falling American crude reserves. Price levels 5 years ago were $25. These high oil prices are taking a toll on poor and deprived countries that rely on imports.

The price increases are a disaster for developing countries that rely on imports for their energy needs according to analysts. Their oil bills have inflated, worsening their deficits and hindering their battle against poverty whereas wealthy countries have been extremely good at adapting to considerably higher oil prices.

Analysts have commented that the position is likely to continue. Demand for oil has rocketed in the last few years owing to the requirements of up-and-coming economies, especially China.

The International Monetary Fund has just increased its forecast for world growth to 5.2% for 2007 and 2008 and recognises that high oil prices present a danger but it is not concerned.