The oil producing nations, OPEC, yesterday announced that oil production output was to remain unchanged from December 2008 levels.

The last cut in production (2008) was aimed at bringing output down by some 4.2 million barrels a day to help engineer a rebound in prices, which had collapsed to the low $30s from a mid-2008 to a high of almost $150 per barrel.

Members were also asked to cut overproduction which stands at nearly two million barrels a day. OPEC is now pumping about 27 million barrels a day.

It is clear that the actions of OPEC are intended to push prices up – although it does not immediately become clear why. Prices yesterday stood at $82 per barrel of crude and this reflected a number of developments. First and foremost, worries about the Greece problem pushed prices up. A coup in Niger (mistaken for oil-rich Nigeria) sent buyers flocking to the market; increased demand for winter heating and the seizure of an oil tanker by pirates all helped increase the price of oil.

But, with Europe edging out of recession, the warning signs are there for all to see. OPEC cut production because it was clear that the world’s economic crisis would bring about a slowdown in manufacturing. This, of course, was illustrated by a reduced demand for oil, that then sent the value of oil per barrel into freefall. To arrest this trend, OPEC cut down production, helping to first stabilise prices and eventually trigger a recovery.

That recovery is well underway – the arithmetic is simple enough. In 2008 a barrel of crude cost about $30 and now it costs over $80.

But analysts are predicting that oil prices could shoot through the roof again – the reason being Asia’s ever increasing demand for fuel.

Asian demand for oil is increasing by more than two million barrels per day, and Barclays analysts have said that if Asian demand can grow at such rapid rates when prices are in the $70 to $80 range, then prices cannot stay in that range for much longer.

Of course, we must remember that this is all part of an elaborate ballet sequence where the price of oil is the dance partner of the world’s economy. While one may understand that the price of oil is directly linked to world economic growth and the quantity of barrels which are pumped out every day – one must also understand that it is also linked to economic forecasts.

In other words, OPEC is biding its time. While it is clear that at this present moment there is a slight surplus in production, China’s forecast of eight per cent growth by the end of 2010 will not only push prices up because of market expectations, but also because that surplus will become a shortage.

This is a deliberate move to ensure that there will, once again, be a shortfall between the amount of barrels produced and the demand for oil. It is not rocket science: this will mean that because production will be lower than demand, the price of oil will eventually skyrocket once more.

And this brings us to the crux of the matter. If we are still hedging our oil purchases, is it not time to look into buying in advance? It must be understood that the price of oil is not dependent on economies which are stagnant, but those which are thriving. If India and China continue to grow at the rate projected, we can fully expect to be paying through the nose for oil – while we are still coming out of recession. That really does put the writing on the wall – barring an increase in output – when Europe and the US do finally register solid growth, prices could increase astronomically.

This has already happened once before. When oil was trading at $60 per barrel in 2008, this newspaper had carried a leading article asking what might happen to the economy if oil were to double in price. The article was dismissed, yet months later we were paying $120 per barrel. One hopes that we will not be caught napping again.