There is currently an atmosphere of great tension in West Asia. The Strait of Hormuz has been closed. Amidst this major crisis, OPEC+, a group of oil exporting countries, has taken a major decision. OPEC Plus has given its full consent in principle to increase its crude oil production target in the month of June. This step has been taken to control oil prices worldwide.
What is OPEC Plus’ plan on production?
- According to multiple reports, seven OPEC Plus countries have agreed to increase the oil production target next month.
- Under this, oil production will be increased by about 1,88,000 barrels per day.
- However, until the Strait of Hormuz is completely opened, this increase in production will be considered only nominal.
- Amidst the geographical and political crisis, this is the third consecutive month when a decision has been taken to increase oil production in this manner.
How big a shock is being out of UAE?
Last week, the UAE had announced its complete exit from OPEC and OPEC Plus groups. This decision of UAE is being considered a big blow for this oil exporter group led by Saudi Arabia. The UAE has said that this tough decision has been taken keeping in mind its long-term strategic and economic vision. The UAE’s exit will weaken the group at a time when the exports of Gulf countries have already been badly affected due to the blockade of Hormuz. Let us tell you that UAE had a huge share in OPEC’s total oil exports, which was about 15 percent.
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How are Kuwait-Iran’s oil exports amid the blockade?
After the departure of UAE, now a total of 21 member countries including Iran are left in OPEC Plus. Due to the blockade of Hormuz, Iran’s own oil exports have also declined drastically. At the same time, Kuwait’s situation is the worst because in April Kuwait has exported zero (zero) barrels of crude oil. Such a serious and bad situation has been seen for the first time in Kuwait since the occupation by Iraq in 1991. Kuwait Petroleum Corp has declared ‘force majeure’, stopping the export of about 2 million barrels of oil every day.
Official figures on production?
Although OPEC Plus has 21 members, only seven countries (and the first UAE) have been taking the decision on production every month. According to the data, the average crude oil production of all OPEC Plus members in the month of March stood at 3.50 crore (35.06 million) barrels per day. This figure has been much less than the month of February. There was a huge decline of 77 lakh (7.70 million) barrels per day in oil production in March compared to February.
What was the impact on crude oil prices?
On one hand, the oil crisis is deepening, while on the other hand, a sudden decline in prices has also been seen. Some reports have claimed that Iran has proposed new talks with America by making Pakistan a mediator. As soon as this news hit the market, crude oil prices fell sharply. The price of West Texas Intermediate fell more than 5 percent to below $100 a barrel, later recovering slightly to $101.7. Similarly, Brent crude also fell by more than 3 percent to $ 106.98, which later increased again to $ 108.4.
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