With the current global economic situation, the Organization of petroleum exporting countries, which appears to be deeply split, met in Vienna to discuss the possibility of reducing production and increase prices for crude oil.

Saudi Arabia, which is the world’s largest oil producer and cartel member with the greatest leeway to tighten or open its taps, showed up in the summit promising not to reduce its production and hold the group’s line on quotas.  Other members of the OPEC including Venezuela and Iran wish to cut their production in order to improve oil prices.

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Market analysts are pessimistic about the possibility of improvement in the oil market. Saudi and other key members of OPEC have been forced to become more concerned about the oil market especially due to the looming traditional summertime rush in fuel demand and the threatening date for the imposition of international sanctions on Iranian oil trade.

Giving his opening speech to the OPEC group during the last summit in Vienna, the group’s secretary general, Abdalla Salem el-Badri, noted that the long-term nature of the oil industry and the importance of clarity and certainty, for oil and energy, call for the following words Stability, stability, stability.

According to report published by the international energy agency on Wednesday, twelve members of the OPEC group provided 31.9 million barrels of oil a day in May, which is almost 35% of international oil supplies. The energy agency also noted that OPEC’s oil production was pushed up by Iraqi and Saudi production. The group’s current output has risen by about 2.8 million barrels a day since May last year. By December last year, OPEC’s oil production had risen by about 1.4 million barrels a day.  This output exceeds greatly what the group had predicted, and members wish to garner greater revenue by increasing the prices.

Even though oil prices have dropped by about 22% since the start of May, historical standards have forced them to remain high causing them to drag the economic recovery in the US and Europe. In a bid to avoid slowing the global economic recovery which may have a permanent damaging effect on oil demand, Saudi Arabia has continuously insisted on producing 10 million barrels a day.

Oil analysts such as Fadel Gheit of Oppenheimer and Company argue that even though there has been a drop in oil prices for the last three months, oil prices are still inflated with the international supply and demand view refusing to offer support to current prices.

Although the cost of OPEC’s basket of crude oil mix has remained at a 16-month low, this year it has set a record by going up to $114.28 per barrel.  Oil consumers in Europe appear to be hard-pressed following the weakening of the Euro and oil being priced in dollars.

Some analysts also argue that prices are likely to remain at or close to current levels. They attribute this development to the increasing consumption of gasoline in America, which has gone up past 9 million tubs a day, the first increase to be witnessed since August.

Oil prices have been one of the most important variables for the economic policy makers. Inflated prices act the same way as tax increases, consuming finances from consumers and draining it off from consuming countries. Gheit approximates that the Middle East chaos has increased regular oil prices by almost 25 dollars a barrel, or more importantly 700 million dollars a day, an astounding figure of over $380 billion during the past 18 months.