OPEC+ has agreed not to increase supply in April as they await a more substantial recovery in demand amid the COVID-19 pandemic.
- Crude prices rose after the announcement and are up 33% this year
- OPEC is an intergovernmental organization of 13 countries.
- Founded on 14 September 1960 in Baghdad
- 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 the global crude oil market
- 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.
What is OPEC+?
- The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
- OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
- Saudi and Russia, both have been at the heart of a three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.
OPEC Countries – Functions
Organization of the Petroleum Exporting Countries(OPEC) has a working methodology which is mentioned below.
- The OPEC Member Countries adjust their oil productions activities in order to bring stability to the petroleum market and help manufacturers get a good return on their investments. This policy is also designed to ensure that oil consumers continue to receive stable supplies of oil.
- Twice a year, the ministry of energy and hydrocarbon affairs meet twice a year to review the status of the international oil market and decide upon steps that will bring security in the oil market
- The Member Countries also hold other meetings that address various point of interests including that of petroleum and economic experts and specialized bodies such as committees and panels in charge of the environment.
Concerns for India:
India is the world’s third-biggest oil importer. India imports about 84% of its oil and relies on West Asian supplies to meet over three-fifths of its demand.
- As one of the largest crude-consuming countries, India is concerned that such actions by producing countries have the potential to undermine consumption-led recovery and more so hurt consumers, especially in our price-sensitive market.
Source: The Hindu