Oil Prices at Historic High Despite OPEC Production Increase Announcement

The government has made an upward adjustment to this year’s price outlook for Dubai crude oil from the Middle East as international oil prices have kept up with the hike for consecutive days.

The Council of International Oil Price Experts, an organization jointly set up by the private and public sectors, announced that the projected annual average price for Dubai oil has been adjusted to be $37 to $40 at a meeting held in the main office of the Korea National Oil Corporation on March 17. It was forecasted at the beginning of the year to be around $30 to $35 per barrel.

Prior to this announcement, OPEC decided to increase its production quota to 500,000 barrels per day at its general assembly the day before in order to stabilize the petroleum market, but this did not have much effect in curving the hike in the oil prices.

According to oil corporations, the price of West Texas Intermediate (WTI) crude from the United States reached a historic high, closing at $56.46 per barrel, up $1.37 from the previous day, on March 16.

The price of North Sea Brent crude also rose $1.11 to $55.09 per barrel, breaking the $55 level for the first time since the spot market was created in the 1980s.

On the other hand, the price of Dubai crude dipped a bit (by $0.26) from the previous day to close at $46.23 in response to OPEC’s decision to increase production.

Chang-Won Kim changkim@donga.com