The move, announced on Thursday, has been welcomed by the EU and some Opec countries, including Saudi Arabia, who hope the move will stabilise the threat of a global economic downturn.
In the past, rising oil prices have precipitated economic downturn. A 21-year high of $42.45 per barrel was hit earlier in the week following the militant attacks in Saudi Arabia which left 22 people dead. As the price of oil soared over $40 in the US on Thursday, stock on the New York Stock Exchange fell in value.
Opec – which says its main aim is to achieve stable oil prices that are fair for both producer and consumer – hopes to increase the number of barrels of oil currently produced by an extra two million per day.
Opec has placed limits upon the amount of oil it produces in order to maintain a control over the price of oil. By increasing or limiting production levels, it effectively controls oil’s value.
However, this overproduction may have little effect upon the amount of oil being produced, as Opec already produces 2.3 million extra barrels a day over their limits.
The price of oil has already risen by some 25 per cent this year due to various pressures. The fear that Iraqi production will fail to meet expectations and increasing terror threats are some of the causes of this increase.
Others include the massive increase in demand of oil-using countries. The US burns around 24 millions barrels of oil per day, two-thirds of which goes on transport.
Global investors have done little to help lower the process of oil with excessive speculation for profit causing prices to remain high.
Further pressure is being put on Opec to increase production by governments of oil-using nations who are all too aware of the increasing politicisation of petrol prices.
The move by Opec has been described by some as "cautious"; but countries hope that when they next meet on 21 July, the effects of Thursday’s decision will bear fruit with lower prices coming in across the global market.