What : OPEC countries and its allies
OPEC plus countries include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
What is in news : OPEC+ has decided to increase overall production by 4,00,000 barrels per day every month till the remaining portion of the group’s 10 million barrel per day production cut, announced in April 2020, is completely phased out. The decision also ends a standoff between the UAE and other OPEC+ countries on tying an extension of the supply agreement to increases in production.
Why was the stand-off:
- The initial proposal by OPEC+ countries had tied the gradual increase in production to a six-month extension of the production agreement which was set to expire in April 2022.
- The UAE did not agree to the proposal stating that the reference production levels used to calculate supply quotas for OPEC+ countries did not represent the actual supply capacity of the UAE and that an increase in supply should not be tied to the proposed extension without a revision in reference production levels.
Impact on India :
- The announcement of an increase in production levels coupled with fears of increased mobility restrictions following an increase in Covid-19 cases has led to a pause in the relentless rise of crude oil prices.
- India has already seen a 21.7 percent increase in the price of petrol and diesel since the beginning of the year.
- Permanent, intergovernmental organization
- Created at the Baghdad Conference in 1960
- OPEC countries – Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela
- Aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
- Membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.