Global oil prices are in the headlines once again with crude oil prices soaring following Russia’s invasion of Ukraine on 24 February 2022. Global crude oil prices have shot up; the Brent increased by around 22% to USD 114 a barrel at the end of May 2022, from a low of USD 93 a barrel in early February 2022. The volatility of global oil prices has worsened Sri Lanka’s economic woes. This blog discusses the main drivers of oil prices, the effects of price volatility on the Sri Lankan economy and outlines some policy options available to mitigate the adverse effects of oil price fluctuations.
Sri Lanka’s petroleum imports are rising at an alarming rate. This article by Vishvanathan Subramaniam examines recent trends in global oil markets and analyzes corresponding impacts on Sri Lanka’s economy. It suggests that while global oil prices are expected to decline in the short to medium term, Sri Lanka cannot be expected to maximize growth potential and ensure energy independence due to several structural inefficiencies.