About OPEC arrangement
- The Organization of the Petroleum Exporting Countries (OPEC) is a group consisting of 13 of the world’s major oil-exporting nations.
- Countries that belong to OPEC include Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela (the five founders), plus the United Arab Emirates, Libya, Algeria, Nigeria, Angola, Congo, Equatorial Guinea and Gabon.
- Note: Ecuador and Qatar terminated their membership of OPEC recently.
- OPEC was founded in 1960 to coordinate the petroleum policies of its members and to provide member states with technical and economic aid.
- OPEC is used to work as a cartel and fix prices in a favourable band. It could bring down prices by increasing oil production and raise prices by cutting production.
- The 2014 oil crisis, which was accentuated by oversupply of crude, brought down prices below $30 a barrel. Since then, OPEC has been working with non-OPEC countries like Russia, Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Sudan and South Sudan to fix the global prices and supply.
- Known as the “OPEC Plus” arrangement, this alliance kept production lower and pumped up the prices.
Why in News?
- Ahead of a critical OPEC meeting on July 1, India’s Petroleum and Natural Gas Minister Dharmendra Pradhan said he is persuading oil exporting countries to moderate surging oil prices and warned that high prices would push the country to tap alternative petroleum import sources such as Iran.
- He also indicated that India would opt for whichever option provided competitive prices within its ‘global diplomatic framework’, including Iran if the economic sanctions imposed on it by the U.S. were lifted.