Issues almost entirely unrelated to the fundamentals of the oil markets and that are much beyond the control of Saudi Arabia and other oil producers are adding to the current woes of the energy markets.

Oil producers are endeavoring their best to dampen the overheated markets. The OPEC is currently producing at their highest level in many, many decades, at least since the 1979 Iran revolution. The organization has already increased its production by 300,000 barrels a day to around 30.4 million barrels a day over the last two weeks or so. Hence the current rise in crude oil process does not have any justification as there is enough oil to meet the oil demand, even the Indian Oil Minister Mani Shankar Aiyar concedes. “The mindless speculation in crude oil prices in New York is the primary cause for this because there is absolutely nothing else that justifies such a rise in prices,” Aiyar added. “It is indeed worrisome,” he emphasized during an interview with Bloomberg conceding that indeed there was a concern that supplies might get disrupted, “yet it was not a strong reason for the surge in prices to the current record levels.”

And thus for various reasons, despite the best of efforts of the oil producers, the bull run continues. Crude prices are touching new heights. They are now on the verge of crossing the mid-60 range. And in the midst of all this the blame game continues. The industrialized world keeps on pointing fingers toward the producers for “not doing enough” to rein in the rampaging prices.

In fact Saudi Arabia needs to be patted for its moderating role in the crude markets. Even the Kingdom did not allow the death of King Fahd to result in nay anxiety in the markets.

However, the announcement of the US government to close its embassies and consulates for two days this week definitely caused a major blow to the already itchy nerves of the market.

Oil markets reacted sharply, for any threat to oil infrastructure in Saudi Arabia is bound to have serious implications in the already precarious supply-demand balance.

What made these major governments make this announcement is difficult to judge at this stage. Analysts say such pronouncements are generally based on what the intelligence community often dubs as “credible chatter”.

However, there are some people say that such pronouncements are often made by the governments on the slightest pretexts, so as to be stay clear of insurance liabilities. This is more of a matter of “We said you so”. If this is indeed the case, and let me admit this is a big if, then the governments need to reconsider their strategy for it adds to the woes of the already stretched energy markets.

Another factor affecting the markets is the break down in negotiations between Iran and the EU of nuclear issues. Markets are indicating their anxiety on the issue that if the matter heats up between Iran and the Western world, then oil supplies could also be impacted. Supply side concerns on this issue are definitely working on the market sentiments.

Again this issue is much beyond the oil producers’ control. The oil producers’ group OPEC is not at all a political body which could take of such geo-strategic issues.

Then at least 12 unplanned shut downs in refineries in the US over the past three weeks or so have also not helped the crude markets either. Again this is something which Saudi Arabia and other oil producers can’t control themselves. Major industrial economies also need to bring their own house in order. The blame game will not help much beyond.