Oil prices have touched a new record of $139.01 per barell in the international market before sliding down to 138. A price increase of $10 has been observed in oil prices in the past two weeks only and still the major investments banks consider the price to rise further.

Morgan Stanley analysts believe that strong demand in Asia and the July 4 celebrations in America will further push the prices up. Current oil prices have seriously pushed our inflation and this week inflation in past passed 20%. The government finance guys are still asking for further increase in oil prices in the domestic market and with reasonable certainity, it will cross Rs. 75 per litre in the a month. This will seriously impact our whole economy and unless Yousaf Raza Gillani secures a credit facility for the oil supplies from Saudi Arabia, Pakistan will face major energy crises which will tighten our economic situation.

The help by Saudi government is very important at this stage and it is not a big deal for them as all oil exporting countries are enjoying the excessive cash regime because of high oil prices. Extending credit facility to Pakistan will not make much difference on the health of Saudi economy and will result in increasing their political clout. The change in oil prices have already changed the balance of equilibrium and now oil exporting countries have greater political power then few years back when oil was trading at just $40 per barell.

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