The world's largest oil producing nations recently confirmed that they will increase production by half a million barrels per day, yet the price of oil continued to rise.
Organization of Petroleum Exporting Countries (OPEC) President Ali Rodriguez said the 11nation cartel would honor an earlier promise to pump the extra oil because prices had stayed above $28 a barrel for 20 consecutive working days.
OPEC members Kuwait, Iran, Algeria and Qatar immediately claimed that they would step up production. The announcement of this fourth production rise of year 2000 failed to materialize hopes of lower prices.
Peter Young, Associate Director of Commodities at Royal Bank of Scotland, conveyed, 'I'm skeptical whether they can bring an extra 500,000 barrels a day into the market quickly. But even if they can, I don't think anyone will tell you that there's not enough crude.”
U.S. Energy Secretary Bill Richards and oil analysts are skeptical that OPEC’S decision will help to correct the market imbalance. Despite the cartel’s increase in production of 3 million barrels per day since the beginning of this year, prices have continued to soar.
Demand for oil and other petroleum-based products remains at a high level, which has caused crude prices to triple in less than two years. Some experts predict a market panic that could trigger even higher prices of heating oil.
OPEC recently reacted to global fears of an approaching energy crisis by deciding to raise the production of barrels by 800,000 per day.
The forthcoming measures aim to cope with a surge in crude oil prices and to minimize the possibility of a heating fuel shortage. Many nations favor the expanded production because they hope that it will remedy a supply crunch, which has caused crude prices to hit a ten-year high of $35 per barrel. – (Albawaba-MEBG)
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