OPEC Plus decides to cut production
#GS-03 Economy, #GS-02 International Relations
- The Organisation of the Petroleum Exporting Countries is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
- It was created with the aim to maintain the supply of oil in order to control the price of crude oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
- The organisation is headquartered in Vienna, Austria.
- OPEC membership is open to any country which is a substantial exporter of oil, and which shares the ideals of the organization.
- OPEC currently has a total of 14 Member Countries which are, Iran, Iraq, Kuwait, United Arab Emirates (UAE), Saudi Arabia, Algeria, Libya, Nigeria, Gabon, Equatorial Guinea, Republic of Congo, Angola, Ecuador and Venezuela.
About OPEC plus:
- The non-OPEC countries which export crude oil are termed as OPEC plus countries.
- OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
- OPEC Plus was created in 2016 when OPEC countries decided to ally with other oil-producing countries outside the group to cut down the global output of oil.
- OPEC countries and their allies, in a ministerial meeting held in 2019, accepted a ‘Charter of Cooperation’, to institutionalise the cooperation.
The importance of OPEC to India:
- India is the world’s third-largest importer of crude oil in the world.
- India imports about 84% of its oil and we are heavily reliant upon West Asian supplies to meet over three-fifths of its demand.
- Crude Oil also forms the largest component of India’s import bill and an increase in crude prices can make India’s current account deficit higher.
- The cut in OPEC Plus production can create upward pressure on oil prices which have fallen to about $90 per barrel from about $120 per barrel in early June.