OPEC’s decision to streamline production under the output quota system currently in vogue has largely been ignored by the markets. The decision to increase the production output quota by 500,000 barrels a day from July 1 failed to make any real impact on the overheating crude markets.

The prices appear only a hiccup away from the psychological barrier of $60 a barrel. As per the US Energy Information Administration, due to the current market strength, OPEC nations will earn $430 billion selling oil this year, up 27 percent from 2004.

The net oil-export revenue estimate is 25 percent higher than in a January forecast, and now assumes that US benchmark crude-oil prices will average $53 a barrel this year.

While some analysts were already arguing that the OPEC announcement was inconsequential in real sense, as according to them the OPEC decision only helped to legitimize the excess production that was already there in the market. The OPEC decision would not bring about any real and effective change on the already precarious demand-supply balance, the skeptics were emphasizing. They turned out to be true but for completely different reasons.

The OPEC decision was greeted by developments in Nigeria, as worries about security of supply were highlighted by the closure of the US, German and British consulates in Lagos, after a warning of a terrorist threat.

Nigeria is the world’s eighth-largest crude exporter and the fifth-biggest exporter of oil to the United States. Its exports to the United States have risen to 1.1 million barrels per day in the most recent government statistics — about 10 percent of US crude imports. Although despite the closure of the embassies in Lagos, the country continued to produce oil are normal levels.

In a survey of industry executives last week in Boston, more than half considered “political upheaval in a strategic country” as the most likely cause of a disruption in oil supply.

In the meantime, top oil officials from Mexico and Norway last Thursday reiterated they do not have any spare capacity to help ease crude oil prices with increased supply.

Norway is the world’s third largest oil exporter after Saudi Arabia and Russia, and is already producing at its full capacity of about 3 million barrels per day. Mexico is the third largest non-OPEC exporter, with most of its sales going to the United States.

Simultaneously, new questions about the refining glitches also re-surfaced in the meantime. Shell’s Deer Park refinery confirmed last week it has powered down a 67,000-barrel-a-day catalytic cracking unit that makes additives for gasoline and diesel. The unit was likely to remain closed for 10-14 days, Shell said.

The last time prices were anywhere near as high was April 1, when oil closed at $57.27 on the New York Mercantile Exchange.

“Let’s call this what it is — rampant speculation,” said Kyle Cooper of Citibank Global Market in Houston.

“It’s the momentum players pushing it higher, and they are using anything they can find as justification.”

Cooper isn’t buying into the fear factor.

“This is about what might happen, not what is happening now,” he said. “How much oil has the US mission closing affected? How much oil has the UK Consulate closing affected? Not one drop.” Cooper says if genuine fear were motivating the market, prices would ease when the worst-case scenario doesn’t materialize. He cites the heating oil example.

Two weeks ago, crude oil prices started popping because of a heating oil inventory shortage, even though the cold season just ended. In the last two weeks, those distillate stocks have grown by almost 4 million barrels, but oil prices continue to climb.

“Now their excuse is that gasoline inventories are only 10 million barrels above that year,” Cooper said. “They go from one hype to the next.”

It’s hard to ignore overall petroleum storage numbers for the United States, which are more than 200 million barrels higher than they were in spring 2003. Crude prices were $30 a barrel back then compared with more than $58 a barrel today.

“If you take an objective look at inventories, there’s no shortage,” Cooper said. “The only shortage in this market is financial sellers.”

Steve Bellino, senior vice president of the US energy risk management firm Firmat also agrees to the scenario “we’re confident OPEC can keep pumping, but a lot of people are anticipating that in the fourth quarter the current oil output by OPEC won’t meet demand,” Steve Bellino said. “That’s what they’re betting on. Obviously this isn’t a fundamental play.”

Indeed there are issues other than what meet the eyes. OPEC can try and influence fundamentals, not something much beyond its realms. That message needs to be driven home to those who control the oil supply.