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OPEC continues to exert significant influence on world oil markets, despite the fact that a significant portion of the oil exported by those nations is heavy, sour oil that is not easily compatible with the world’s refining capabilities.

Minimal spare production capacity prevented OPEC from putting a lid on crude oil prices that rose above the then-targeted ceiling price of $30/bbl in late 2003 to this summer’s peak of over $70/bbl. OPEC exerts an especially large impact on tanker demand because the exporting countries contribute some of the longest haul oil exports based on ton-miles for VLCCs, Suezmaxes and Aframaxes. Last week, OPEC delivered a small surprise by agreeing to cuts totaling 1.2 million barrels per day (bpd), compared to the expectations for production cuts totaling 1.0 million bpd.

Exxon Mobil (NYSE:XOM) and Royal Dutch Shell (NYSE:RDS.A), the world's two biggest oil companies, posted higher earnings than analysts expected after crude prices soared to a record and production increased. Exxon Mobil’s income rose 5.7 percent from a year earlier to $10.5 billion while Shell's income minus some changes in inventory values rose to $7.03 billion.

Oil demand is quite surprisingly strong and doesn't seem to be responding as one would expect to higher prices. The big enigma for Wall Street is whether these earnings are sustainable going forward. Exxon Mobil shares touched a record high after the company reported its 10th straight increase in profit and its biggest production gain since Exxon's 1999 acquisition of Mobil. The world's three largest oil companies -- Exxon Mobil, Shell and BP Plc (NYSE:BP) -- netted $172,000 a minute during the quarter. The long-term outlook for Big Oil is very bullish. Demand continues to be strong, and supplies just aren't keeping up.