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Oil Prices Soaring Despite Saudi Arabia’s Promise To Increase Supply

It is a simple math—you need not be an economist or an expert in the field to understand that when you increase the supply, the prices of a product tend to fall. This is extremely obvious and the rule applies the same in every field and every sector. But yet, after the recent meeting of the oil producers that took place in Vienna, where all the major producers agreed on curbing the prices of oil; the oil prices are reaching new heights. This paradox is quite difficult to understand as there seems no valid logic behind the occurrence.

Officials from some of the countries that are large producers and suppliers of petroleum like Russia and others as well have promised to increase the overall output. Despite that, the price of the Brent crude has risen significantly, by as much as 20% with the price now close to $78 per barrel.

One of the major reasons for the rise in the prices is the increasing crises in countries like Venezuela, Iran and Libya are affecting the prices of oil. The threats to the production in these countries are indeed causing a problematic situation as far as the prices are concerned. The analysts think that there is a buffer existing right now, but the future situation can be very well improved with correct measures.

In other news, the holiday gas prices have hit an all time high in the last four years or so. The gas prices in the regions like Western Montana are ranging from $2.7 to $3.09, thus showing a heavy surge in pricing. The changes in sanctions from Iran along with the reduction in production in countries like Venezuela are increasing the prices further.