(Dr. Mehdi Asali)

There has been a widespread recognition, amongst analysts and observers of oil markets developments, that the upward trends of oil and commodities prices in the last several years (see table below); say 2003-2008; have been mainly due to a persistence excess demand for oil and other commodities over its sluggish supply. This demand driven increase of oil and commodity prices has been clearly influenced by outstanding economic performance of major developing countries particularly China and India and strengthened with an above the long-term trend economic expansion of OECD economies throughout this time period. World economy featured a robust real growth, averaging about 4.4-5.5 percent during 2003-07, associated with low inflation and low interest rate in most part of the world.