OPEC ANALYSIS

OPEC is an acronym for the Organisation of the Petroleum Exporting Countries,

which is an intergovernmental organisation consisting of fourteen nations that
was founded in 1960 by the first five members (Iran, Iraq, Kuwait, Saudi Arabia
and Venezuela) in Baghdad. The headquarters of the organisation has been in
Vienna, Austria since 1965. Estimates, released in September 2018, claim that
44% of global oil production and 81.5% of the world’s ‘proven’ oil reserves are
accounted for by OPEC.

What states are members?

The list of the fourteen member states, alphabetically, is as follows: Algeria,

Angola, Ecuador, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria,
Qatar, Republic of the Congo, Saudi Arabia, United Arab Emirates and
Venezuela.

Recent Decisions

On December 7, 2018, OPEC agreed to cut 1.2 million barrels per day.
Members would cut 800,000 bpd. Allies would cut 400,000 bpd. Its goal is
to return prices to $70 a barrel by early fall 2019. In November, average global
oil prices had dropped to $65 bpd. Commodities traders had bid prices down.
They believed higher U.S. supplies would flood the market with supply at the
same time slowing global growth would cut into demand.

On July 1, 2019, members agreed to maintain the cuts until the first quarter of
2020.
ATTACK ON SAUDI ARABIA

In the early hours of September 14, Saudi Arabia suffered the deadliest attack
on its oil facilities in recent times when a small army of drones attacked two
major oil plants, destroying nearly 50 per cent of the country's global supply of
crude. The Houthi rebel group based in neighbouring Yemen claimed
responsibility for the attack, but the United States, a key Saudi ally, blamed
Iran for it, a charge the latter denied.

ANALYSIS

The US, the world's largest oil consumer, is not a member of OPEC, nor is it
participating in the supply pact. A jump in oil prices might lead to costlier
petrol at the pumps, a key issue for Trump as he seeks re-election next year.

IMPACT ON INDIA
India, being the fourth largest importer of crude oil, imports 85 per cent of
total oil and 95 per cent of gas from OPEC nations.
OPEC country is likely to be taken as a wake-up call for the country like
India as Indian economy immensely benefited from the cheaper oil prices.
"Lower oil prices kept the economy on the shining path and managed to
keep inflation under control. Following the OPEC decision, there is likely to
be a positive cascading impact on the country's fiscal scene and inflation
dynamics,"

RESULT OF ATTACK ON SAUDI

An extended period of high oil prices is likely to hurt India’s economic growth.
Saudi is our second-biggest oil supplier after Iraq. It sold 40.33 million tonnes
of crude oil to India in 2018-2019 fiscal, when the country has imported 207.3
million tonnes of oil