Why do oil prices matter to the global economy? An expert explains

Oil prices are influenced by the global economic outlook. Changes in supply and demand and geopolitical tensions cause price fluctuations. [iStockphoto]

Demand for oil plunged in 2020 during the pandemic when lockdowns led the price to fall below zero first time in history due to a major downturn in economic activity.

Oil prices have since risen sharply to nearly $100 per barrel following strong economic recovery post-lockdowns. As the global economy grows so does the demand for oil. Moreover, rising geopolitical tensions between Russia and Ukraine and in the Middle East are stoking supply fears. This is contributing to rising inflation and concerns about economic recovery.