Crude oil prices have reached their highest point in a year, raising international concerns about the effect this will have on the global economy.
The world's leading oil exporter, Saudi Arabia, vowed to keep the world markets well enough supplied with crude oil to avoid a shortage.
But U.S. oil reserves are near their lowest point since the mid 1970s. Oil prices have jumped nearly $3 per barrel since the Organization of Petroleum Exporting Countries decided to reign in production last month.
In London, Brent North Sea crude for April delivery gained 19 cents per barrel to close at $32.63.
Director of research at Refco Securities in New York, Jim Steel, says the Saudi oil minister's pledge to maintain market supply does not mean prices will go down.
"In the old days, the Saudis guaranteed both supply and price. They guaranteed ample supply at a fairly low price," he said. "This go-around, it appears more they are only guaranteeing supply, not a low price. I think in one sense what the Saudis are saying is correct. There is plenty of crude around, but at a certain price. And really what we are seeing refineries and buyers in Asia and the Western world doing is they are very reluctant to buy at these high prices."
Unexpected work stoppages at Iraqi export terminals also contributed to decreased oil production during the past two months, further driving up costs.
Mr. Steel says these inflated prices come at a time when refineries are usually increasing their reserves as summer approaches and demand for gasoline rises. "This will mean high gasoline prices; already they are pre-seasonally high. This may have a negative impact on the U.S. economy," he said.
OPEC ministers plan to meet at the end of March to discuss whether to boost unofficial output to meet increased demand, or to maintain production at its current level.