Related Topic in KAS Prelims Syllabus:
International Relations [Paper-I]: International Organisations, International Treaties and Forums, their structure and mandate
Why in News?
- OPEC group of oil-producing countries and their allies, including Russia, have decided to cut oil production by 500,000 barrels per day.
- The group decided to cut output to support the price of energy and bolster their revenues.
News in Detail
- The cuts come on top of a reduction of 1.2 million barrels a day that they have been observing for the past three years.
- In a meeting in Vienna, they agreed to reduce production to stem pressure on prices from abundant reserves and weak global economic growth.
- Ministers gathered at OPEC headquarters decided for an additional adjustment of five lakh barrels per day, effective from 1st January 2020.
- This would bring production 1.7 million barrels per day below October 2018 levels.
- In addition, several countries, mainly Saudi Arabia, will continue their additional voluntary contributions. It will lead to an overall production cut to 2.1 million barrels per day.
- Oil prices surged following the announcement, with US benchmark WTI and its European counterpart Brent crude by about two per cent higher.
- It is a group consisting of 14 of the world’s major oil-exporting nations.
- OPEC is a cartel that aims to manage the supply of oil in an effort to set the price of oil on the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
- It is a permanent, intergovernmental organization, created at the Baghdad Conference in 1960, by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela.
- The other member countries are United Arab Emirates (UAE), Algeria, Libya, Nigeria, Gabon, Equatorial Guinea, Republic of Congo, Angola and Ecuador.
- It was founded to coordinate the petroleum policies of its members and to provide member states with technical and economic aid.
- It is headquartered in Vienna, Austria.
According to current estimates, 79.4% of the world’s proven oil reserves are located in OPEC Member Countries, with the bulk of OPEC oil reserves in the Middle East, amounting to 64.5% of the OPEC total.
[Source: All India Radio, Investopedia]