OPEC Plus announces oil production cuts

OPEC Plus announces oil production cuts

Subject : International Relations

Section: International Organisations

Concept :

• Saudi Arabia and other OPEC+ oil producers announced further oil output cuts of around 1.16 million barrels per day, in a surprise move that analysts said would cause an immediate rise in prices and the United States called inadvisable.
• The pledges bring the total volume of cuts by OPEC+, which groups the Organization of the Petroleum Exporting Countries with Russia and other allies, to 3.66 million bpd according to Reuters calculations, equal to 3.7% of global demand.

OPEC and OPEC+

• Established in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela, OPEC has since expanded and now has 13 member states.
• Member countries are: Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates, Venezuela.
• Qatar terminated its membership on 1st January 2019.
• OPEC+ :
• With the addition of another 10 allied major oil-producing countries, the OPEC is known as OPEC+.
• OPEC+ countries include 13 OPEC member countries, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
• The objective of the organization is to coordinate and unify the petroleum policies of its Member Countries and ensure the stabilisation of oil markets in order to secure an efficient, economic and regular supply of petroleum to consumers, a steady income to producers and a fair return on capital for those investing in the petroleum industry.
• Previously controlled by western-dominated multinational oil companies known as the “Seven Sisters,” OPEC sought to give the oil-producing nations greater influence over the global petroleum market.
• They account for roughly 40 % of the world’s crude oil and 80 % of the globe’s oil reserves, according to estimates from 2018.
• They usually meet every month to determine how much oil the member states will produce.
• However, many allege that OPEC behaves like a cartel, determining the supply of oil and influencing its price in the world market.