Oil prices rose about 1%, as OPEC+ members agreed to its deepest cuts to output since the 2020 COVID pandemic, despite a tight market and opposition to cuts from the United States and others.

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.

Why is OPEC+ slashing production?

• Oil prices skyrocketed after Russia’s invasion of Ukraine.
• The cut made recently is the biggest of its kind since 2020 when OPEC+ members slashed outputs by 10 million bpd during the Covid-19 pandemic.
• The reductions would boost prices and be extremely beneficial for the Middle Eastern member states, to whom Europe has turned for oil after levelling sanctions against Russia since it invaded Ukraine.
• OPEC+ members are concerned that a faltering global economy would reduce the demand for oil, and the cuts are seen as a way to protect profits.

Concerns for India

• Even after importing cheap Russian oil, India has not seen any cut in fuel prices.
• 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.

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