OPEC+ decide to withdraw output cutDate: 21 July 2021 Tags: Miscellaneous
Russia and members of OPEC (Organisation of Petroleum Exporting Countries) have agreed to remove the production cuts by September.
The OPEC+ had imposed a production cut in early this year to negate the falling crude oil prices. This had created shortages, leading to rise in price of fuels.
The grouping has said that it will increase the overall production by 4, 00,000 barrels per day until the production limit is removed.
This move has resulted in the fall of crude oil price. It also ends the stand-off between UAE and rest of the OPEC+ grouping.
Start of issue
A two year agreement was stuck between OPEC+ countries to regulate crude oil production by cutting down daily limit by 10 million barrels.
This was in response to 18 year low price of crude oil in April 2020 due to stall in economic activity across the globe.
Many developing countries including India have demanded that the production cut be withdrawn as it is hurting their economic progress and causing inflation.
The new proposals
The new agreement will increase the production limit for countries such as Iraq, UAE, Kuwait, Russia and Saudi Arabia.
Impact on India
The prices have fallen as a result of reversing production cuts, fear of fall in demand due to increase in Covid-19 cases across the country.
There was request by India to reach a consensus on decreasing the production cut time limit. The new development could come as a major relief.
Since the start of the year, prices of petrol and diesel have increased by 21%. In many places, prices have crossed Rs 100 per litre.