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Source: The Hindu
Relevance: Developments of OPEC are important for India due to its dependency on oil.
Synopsis: The OPEC deal to step up crude production will ease rising prices and balance domestic and global priorities.
Background
- OPEC+ will now step up crude production by 400,000 barrels a day starting in August. The deal will extend until the end of 2022.
- Thus, while the internal rift has been resolved, for now, the danger cannot be ruled out in the future given the increasingly economically and politically assertive UAE.
Read more – How OPEC+ deal to withdraw output cut impacts India
Significance of increasing oil production by OPEC+ countries
- The latest OPEC compromise echoes growing recognition of the delicate balance between competing domestic and global priorities.
- It will also help OPEC+ countries to maximize the returns on their substantial hydrocarbon resources, amid growing speculation of a peak in oil demand within sight.
Concerns for OPEC bloc
- Strict implementation of the Paris climate accord could result in oil demand to peak by 2030, owing to the proliferation of alternative fuels and electric cars.
- Diversification of economies in anticipation of the unfolding global energy transition.
- OPEC’s other concerns are the stabilization of world oil prices without jeopardizing national expenditure programs.
