The recent rise in the price of crude oil has created a big question mark over the sustainability of the positive economic indicator that has been published in the recent weeks.  The employment situation in the US has been heading towards positive territory along with other economic indicators. Moreover, the Greek debt crisis which was the biggest headache for the Eurozone and euro is temporarily getting settled with massive bailout by the Eurozone countries. The time was perfectly suited for the strong economic recovery. However, the pictures couldn’t be as perfect in the coming days as the price of crude oil is heading toward the higher territory.

As we know higher oil price is never a beneficiary factor for the global economy which we had experienced during the time of global financial crisis in 2007 when the price of crude oil had reached near $150 per barrel. Now the situation and scenario in the oil market is pointing toward the $150 mark which could be a catastrophe for the global economy. The sanction by the US and Europe over the Iran and possibility of the latter countering the sanction have created the situation of uncertainty in the oil market which is fueling this spike in the price of black gold.

On the other side, the emerging economy i.e. China and India have been struggling to keep the economic growth in the double figure which they used to. The reason for slowdown in the economy growth is blamed at high inflation in the emerging economy where central banks have been increasing the interest rate to control the inflation. The obvious result of the higher inflation would be the tighter monetary policy which is never ever the complement for the emerging economy.

This means if the tension between the west and Iran gather the momentum then it’s likely that the oil price would climb the hill. In this scenario, there is a greater possibility of the global inflation which could hamper the global growth and send the global economy towards the double dip recession.