In recent
years, the oil market has been characterised by rising, and at times, rapidly
fluctuating price levels. In the last three months alone, Brent crude oil
prices have fluctuated in a wide range from $125/bbl to $89/bbl. Higher
volatility will certainly impact both consumers and producers. Oil exporting
countries can be negatively affected by the impacts of high volatility in oil
prices on fiscal revenues, investment and confidence in the economy. Higher
volatility can have negative impacts on inflation and growth prospects in oil
importing countries as well. As a response to observed higher prevailing
volatility, for example, G20 leaders called for policy options to combat
excessive price volatility in commodity markets in general, and in oil markets
in particular. In order to reduce volatility in oil markets, the G20 experts
group emphasised the importance
of improving data transparency in both financial and physical markets as well
as phasing out of inefficient fossil fuel subsidies. They also urged the use of
country-specific monetary and fiscal responses to support inclusive growth in
order to mitigate the impacts of excessive price volatility.