Russia backs increase in oil output
Russia expects to support an increase in oil production by the group, known as OPEC+, of another 500,000 barrels per day (bpd).
- Oil prices are trading above $50 per barrel, after coming under pressure from concerns that new fast-spreading variants of the coronavirus will lead to reduced fuel demand.
- Russia, other leading oil producers and the Organization of the Petroleum Exporting Countries, a group known as OPEC+, agreed to reduce output to support the global oil market as the COVID-19 pandemic has weakened fuel demand.
- Since the agreement on a record global supply cut in April, OPEC+ has progressively reduced the cuts and is expected in January to release an extra 5,00,000 bpd into the market.
- The Organization of the Petroleum Exporting Countries (OPEC) is an intergovernmental organization of 13 countries.
- Founded on 14 September 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela), it has since 1965 been headquartered in Vienna, Austria, although Austria is not an OPEC member state.
- As of September 2018, the 13 member countries accounted for an estimated 44 percent of global oil production and 81.5 percent of the world's "proven" oil reserves, giving OPEC a major influence on global oil prices that were previously determined by the so-called "Seven Sisters" grouping of multinational oil companies.
- A larger group called OPEC+ was formed in late 2016, to have more control on global crude oil market. The demand for OPEC oil has fallen to a 30-year low in the second quarter of 2020.
- The stated mission of the organization is to "coordinate and unify the petroleum policies of its member countries and ensure the stabilization of oil markets, in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers, and a fair return on capital for those investing in the petroleum industry."
- The organization is also a significant provider of information about the international oil market. The current OPEC members are the following: Algeria, Angola, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, the Republic of the Congo, Saudi Arabia (the De facto leader), the United Arab Emirates and Venezuela. Former OPEC members are Ecuador, Indonesia and Qatar.
- The formation of OPEC marked a turning point toward national sovereignty over natural resources, and OPEC decisions have come to play a prominent role in the global oil market and international relations.
- The effect can be particularly strong when wars or civil disorders lead to extended interruptions in supply.
- In the 1970s, restrictions in oil production led to a dramatic rise in oil prices and in the revenue and wealth of OPEC, with long-lasting and far-reaching consequences for the global economy.
- In the 1980s, OPEC began setting production targets for its member nations; generally, when the targets are reduced, oil prices increase.
- This has occurred most recently from the organization's 2008, and 2016 decisions to trim oversupply.
- However, the influence of OPEC on international trade is periodically challenged by the expansion of non-OPEC energy sources, and by the recurring temptation for individual OPEC countries to exceed production targets and pursue conflicting self-interests.