OPEC+ agree to deep cuts

News Highlight

Oil prices rose about 1% on Wednesday as OPEC+ members agreed to their deepest cuts to output since the 2020 COVID pandemic.

Key Takeaway

• Brent crude rose 93 cents, or 1%, to $92.73 a barrel.
• The two million­ barrels per ­day cuts from OPEC+ could spur a recovery in oil prices that have dropped to about $90 from $120 three months ago.

The organisation of the Petroleum Exporting Countries (OPEC)

• About
  • The OPEC  was founded in Baghdad, Iraq, with the signing of an agreement in September 1960 by five countries, namely:
    • Iran
    • Iraq
    • Kuwait
    • Saudi Arabia
    • Venezuela.
• Aims and objectives:
  • Coordinate and unify petroleum policies among Member Countries
  • To secure fair and stable prices for petroleum producers.
  • The efficient, economic and regular supply of petroleum to consuming nations.
  • An acceptable return on capital to those investing in the industry
• Headquarters:
  • It initially had its headquarters in Geneva, Switzerland.
  • It was then moved to Vienna, Austria, in 1965.
• Members:
  • Currently, the Organization has a total of 13 Member Countries.
    • Iran
    • Iraq
    • Kuwait
    • United Arab Emirates(UAE)
    • Saudi Arabia
    • Algeria
    • Libya
    • Nigeria
    • Gabon
    • Equatorial Guinea
    • The Republic of Congo
    • Angola
    • Venezuela 
  • OPEC membership is open to any country that is a substantial oil exporter and shares the organisation’s ideals.

OPEC+

• About 
  • OPEC Plus was created in 2016 when OPEC countries decided to ally with other oil-producing countries outside the group to cut down the global output of oil.
  • The non-OPEC countries which export crude oil are termed OPEC-plus countries.
• Members:
  • The non-OPEC countries that export crude oil, along with the 13 OPECs, are termed OPEC-plus countries. The non-OPEC countries are
    • Azerbaijan
    • Bahrain
    • Brunei
    • Kazakhstan
    • Malaysia
    • Mexico
    • Oman
    • Russia
    • South Sudan 
    • Sudan.

The benchmarks in the global market

• Brent crude:
  • It is the international benchmark price used by OPEC.
  • Brent crude oil originates from oil fields in the North Sea between the Shetland Islands and Norway.
  • Since India imports primarily from OPEC countries, Brent is India’s benchmark for oil prices.
• West Texas Intermediate (WTI):
  • WTI crude price is a benchmark for US oil prices.
  • West Texas Intermediate (WTI) is sourced from US oil fields, primarily in Texas, Louisiana, and North Dakota.

Asian Premium

• Asian Premium is an extra charge collected by OPEC countries from Asian countries when selling oil compared to western countries.

Content Source: The Hindu

Read more…