Business

OPEC Continues Meteoric Rise in Oil Prices

Written by Gaurav Bhola, MSM, Managing Editor & Community Manager on July 16, 2007 1:55 pm EST

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The demand for oil continues to rise. The Organization of the Petroleum Exporting Countries (OPEC) said oil demand in 2008 would increase by 1.6 percent or1.34 million barrels per day to 86.94 million bpd. OPEC stated on Monday that oil producing rivals, use of alternative fuel sources, and conservation by consumers would be monitored as this would have dire future consequences in the demand for crude from the exporter group.

OPEC’s July Monthly Oil Market Report stated that, “The outlook for the oil market in 2008 is shaping up to be quite similar to the current year, with continued tightness in the downstream supporting high product prices and frequent refinery outages exerting further upward pressure, despite the healthy crude oil market,” According to OPEC’ assessment of high gas prices reflected strain on refineries, oil speculation, and the tense political atmosphere.

The price of gas keeps rising even though there isnt a shortage of oil. The International Energy Agency which serves as adviser to 26 industrialized countries stated in its July report that they foresee demand for oil rising by 2.2 million bpd in 2008; an estimate that dwarfs the OPEC’ outlook by 860,000 bpd.

The thirst for oil is growing unabated. Last week, the London Brent settled up $1.17 to $77.57 bpd just a dollar short of last August’ all time record high of $78.65. OPEC expects the refinery capacity to grow by 1 million bpd next year, far short of demand increase. Global oil consumption for next year is expected to rise to 1.45 million bpd. Since last year the group has decreased oil output by 1.7 million bpd and is planning to re-examine the continuation of the cap on supply when they meet this September.

Ultimately, OPEC and the global oil conglomerate for short-term monetary gain are exploiting consumers and indirectly propping up fledgling future competitors in alternative fuels due to incessant high prices.

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