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Source: The post is based on an article “Express View on OPEC’s new move: Crude cuts” published in Indian Express on 8th June 2023.
Syllabus: GS Paper 2 – Effects of policies of developed and developing countries on India’s interest
News: OPEC+ countries have decided to further cut crude oil production for 2024. This decision has significant implications for global oil prices and India’s economic recovery.
The group has agreed to reduce overall production targets from January 2024 by a further 1.4 million barrels per day (bpd) to a combined output of 40.46 million bpd. Saudi Arabia, the biggest OPEC producer, would lead these cuts.
What are the reasons for these production cuts?
Demand for oil has fallen behind supply due to weakness in global growth. It is weakening crude oil prices. This trend is likely to continue for some time.
What are its implications for India?
India imports crude oil to satisfy more than 80% of its needs. Therefore, production cuts, which could increase prices, will hurt India.
However, 2 factors will be important to consider impacts on India. First, India is importing crude oil from Russia at lower than market prices. Second, oil prices in India have not reduced much despite fall in global crude prices.
