01 October 2016 Current Affairs: The Organisation of Petroleum Exporting Countries (OPEC) reached an agreement to cut oil production for the first time since 2008 after an informal meeting in Algiers, Algeria. It was decided that OPEC would reduce output to a range of 32.5 to 33.0 million barrels per day (bpd) from its current output at 33.24 million bpd.
However, how much each country will or reduce its output will be decided at the OPEC’s next formal meeting scheduled in November 2016. In this meeting, special invitation will be sent to Russia (non-OPEC member) to join cuts in production.
India, being the 3rd largest importer of crude oil imports 85% of total oil and 95% of natural gas from OPEC nations. In recent time due to cheaper oil prices in international market due to overproduction and non-coordination among OPEC countries Indian economy had immensely benefited.
However, this decision may result in spike in oil prices which can have major implications for the India’s current account deficit and overall economy in general. In recent times, lower oil prices kept the Indian economy on the shining path and managed to keep inflation under control making it fastest growing economy in G20 countries.
Organization of the Petroleum Exporting Countries (OPEC) : The OPEC is an intergovernmental organization of 14 oil-exporting developing nations that coordinates and unifies the petroleum policies of its member countries
Indonesia, Iran, Iraq, Saudi Arabia (the de facto leader) Kuwait, Qatar, United Arab Emirates (from Asia); Ecuador and Venezuela (from Latin America). As of 2015, these 14 OPEC member countries accounted for an estimated 43% of global oil production and 73% of the world’s oil reserves. Two-thirds of OPEC’s oil production and reserves are in its six Middle Eastern (west Asian) countries that surround the oil-rich Persian Gulf.`