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Source: Indian Express
What is the News?
The meetings among the OPEC+ group of oil-exporting countries have stalled. Because the UAE has pushed back proposals, making an increase in crude oil supply conditional on an extension to an output agreement.
- In April 2020, the OPEC+ countries had signed a two-year agreement. It included steep cuts in crude production to deal with a sharp fall in the price of oil as a result of the Covid-19 pandemic.
- Due to this agreement, the price of crude oil started rising consistently and has now reached $76.5 per barrel. Despite this, OPEC+ maintained lower levels of crude oil production.
- However, the group ran into sharp criticism from developing economies, including India, for deliberately maintaining low supply levels to raise prices.
What is the issue now?
- The current issue is between the UAE and Saudi Arabia. UAE has accepted a proposal from Saudi Arabia to raise output of crude oil in phases.
- However, UAE has rejected extending the remaining cuts to the end of 2022 from the current end date of April 2021 without adjusting its current baseline production.
How will it impact India?
- If the OPEC+ countries do not reach an agreement to increase production of crude oil, then expected relief in the form of lower crude oil prices could be delayed.
- India is currently facing record-high prices of petrol and diesel, with prices of petrol exceeding Rs 100 per litre in 13 states and Union Territories.
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