The international prices of oil saw moderate rises over the past few weeks but are still far below levels that existed two years ago.
The prices are now well above 40 dollars per barrel in what experts say is a jump into the positive territory after a multiple month depression that had been caused by a vast oversupply.
But why has there been a market oversupply, what has created it and what are its impacts? Are the Saudis Scared to Cut Oil Production?
With the global oil market currently oversupplied to the tune of an estimated 2 million barrels per day, oil producer group Opec has struggled to formulate an effective strategy aside from “let the market sort it out.”
This triggered a fresh break in prices. But that was not all. Almost two months earlier, Saudi Arabia which produces well above 10 million barrels of oil every day and had clearly seen the prices were crumbling had chosen to increase its production by half a percent. This further pushed down the prices and led to the suspicion among analysts that Riyadh is intentionally helping to push the prices down.
The Saudi's were finally facing the music: low oil prices had sent them scrambling to find additional sources of revenues, and they turned their focus to the annual Hajj pilgrimage.
The media in Riyadh reported in March that the kingdom is planning to move away from oil and use the revenues it obtains from hosting Hajj pilgrimage as its main source of national income.
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