In what could probably be a good news for the Indian government, cracks have begun to appear in the Organisation of Petroleum Exporting Countries (OPEC), a cartel of crude oil producing countries.
A meeting of OPEC is set to be held today (22 June) in which a decision will likely be taken to increase production of crude oil. Saudi Arabia, a key OPEC member, and Russia, a non-OPEC member, are keen on raising the production by one million barrels a day (BPD).
The plans to raise the production comes a year and a half after the cartel decided to cut production by 1.8 million BPD. However, in actual the cut was more at nearly two million BPD.
OPEC’s plan have run into trouble as Iran, suffering from US sanctions after Baghdad-Washington nuclear deal was scrapped, is opposing it. Iran’s consent is vital to raising production but its officials are opposing it because the country cannot take advantage of the hike in view of the sanctions.
“I don’t think we can reach agreement,” Iranian Oil Minister Bijan Zanganeh was quoted by Reuters after walking out of a preliminary meeting yesterday. Despite the Iranian walkout, other OPEC members continued discussions and have almost decided to go ahead with the production hike. Iran has alleged that Saudi Arabia wants a hike in production as it is under pressure from the US.
A production hike or a rift among OPEC members with Venezuela and Iraq supporting Iran should be something to cheer for India. Crude oil imports make up 80 per cent of the country’s total demand and import bills in May jumped 49 per cent due to higher prices in the global market. At the retail level, the Government has been facing criticism with petrol prices being above Rs 80 a litre at fuel outlets.
Crude oil prices had topped $80 a barrel a couple of weeks ago on supply worries before easing. On Friday, benchmark Brent crude was quoted at $73.79 a barrel.
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