From UPSC perspective, the following things are important :
Prelims level : OPEC, OPEC Plus
Mains level : Global crude oil pricing mechanisms
OPEC+ has failed to reach a deal on oil output policy because the United Arab Emirates blocked some aspects of the pact.
- OPEC is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
- It 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.
- It is headquartered in Vienna, Austria.
- OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
- Today OPEC is a cartel that includes 14 nations, predominantly from the middle east whose sole responsibility is to control prices and moderate supply.
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.
Concerns for India
- Rising oil prices are posing fiscal challenges for India, where heavily-taxed retail fuel prices have touched record highs, threatening the demand-driven recovery.
- 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.
- This would hurt consumers, especially in our price-sensitive market.
Answer this PYQ in the comment box:
Q.The term ‘West Texas Intermediate’, sometimes found in news, refers to a grade of (CSP 2020):
(a) Crude oil
(c) Rare earth elements