The recent downslide in crude oil prices from a peak of US $147 a barrel to below $40 and speculated to fall further to $25 has evidently provided relief to oil importing countries, which have been triply inflicted by huge oil pool deficits, growing food prices and global economic downturn. But based on current oil market fundamentals and past experience, there is no reason not to believe that the current fall in oil prices is likely to be temporary. Sooner or later prices will rise and may even be higher than the recent peak because of two particular reasons.

The November 2008 Mumbai terrorist attacks have highlighted the new challenges posed by cyberwar. A faked telephone call from the India Foreign Minister to the Pakistani President caused a diplomatic flutter. It appears that the new civilian leadership in Pakistan was not aware of diplomatic protocol involved in such telephonic contacts and was fooled into believing that this was indeed a genuine communication.

In the just concluded two-day conference at the IDSA on “Changing Political Context in India’s Neighbourhood: Prospects of Regional Cooperation”, Dr Hari P. Bhattaria from Tribhuvan University, Nepal alluded to the problem of integration of over 19,000 former Maoists in the Nepal Army or para-military forces in Security Sector Reforms.

As the saying goes, everything that goes up had to come down. The same holds true for the price of oil, which has seen a slide of around 55% in just three months. At one point of time there were even predictions that prices would reach $200 a barrel. However, currently, the price of oil has dropped to $68 a barrel, from a high of over $147 in July this year. But the question is how and more importantly, why did this happen, and in such a short time.