On Friday, sweet crude for April delivery reached US $56.72 a barrel, as prices reflect sharp hikes in the cost of crude oil in recent weeks. Spurred by escalating oil prices, US gas prices have hit a new high. The most popular grade, self-serve regular, was priced at US$2.10 a gallon, mid-grade at US$2.20, premium averaged at $2.29 a gallon for the period. This is the largest price hike since the run-up to May 21, 2004, when prices hit a previous record of US$2.10.
OPEC agreed to boost its output quota by 500,000 bpd, last week. But since members are already producing above their quotas, no extra supply will actually be added, OPEC's next meeting will be on June 7.
Rising demand for crude oil will ensure that Saudi Arabia's treasury coffers will overflow with cash for a second year in succession, but the Kingdom's runaway spending is playing a significant part in keeping oil prices high. According to a report, the Saudi Government's spending exceeded its budget in 2003 by 23% and 2004 by 28%. The Government is also trying to pay back a debt of almostUS$160 billion accumulated during past periods of weak oil prices.