The OPEC+ group, which includes the Organization of the Petroleum Exporting Countries (OPEC), Russia, and other allies on late Thursday has decided to increase the crude oil production by 500,000 barrels per day from January.
Starting next month, the leading oil producers will be increasing the production of crude oil which will result in a reduced production cut level of 7.2 million barrels per day (mb/d) from the current production levels of 7.7 mb/d. In late Thursday meeting, the decision was made to gradually return back to the production levels of 2 mb/d to the global market.
“In light of the current oil market fundamentals and the outlook for 2021, the Meeting agreed to reconfirm the existing commitment under the DoC (Declaration of Cooperation) decision from 12 April 2020, then amended in June and September 2020, to gradually return 2 mb/d, given consideration to market conditions,” said OPEC in a late-night statement after the 12th OPEC and Non-OPEC Ministerial Meeting.
The OPEC+ decision is expected to help the world’s third-largest oil importer India. It also holds significance for India, as OPEC accounts for around 40 per cent of global production, of which India imports 83 per cent of crude oil. The low international crude oil price regime has also helped India to fill up its strategic crude oil reserves at an average price of $19 per barrel which saved $685.11 million.
The cost of the India’s crude oil imports, which comprises of Oman, Dubai and Brent crude was averaged at $56.43 per barrel in FY18, $69.88 in FY19 and $69.88 per barrel in FY 20. Due to the Covid-19 pandemic, the crude oil prices fell to $19.90 per barrel in April, $30.60 in May, $40.63 in June, $43.35 in July, $44.19 in August and $41.35 a barrel in the Month of September respectively, according to data from the Petroleum Planning and Analysis Cell.