Opec Plus | The cartel and its allies that keep oil on the boil

OPEC Plus countries, an alliance between the Organization of the Petroleum Exporting Countries and other major oil producers, are in the limelight as global oil prices soared above $120 a barrel last week as supplies failed to keep up with rising demand. The price of oil is expected to remain elevated for some time to come after the European Union decided last week to cut down oil imports from Russia by 90% by the end of this year and block European insurers from selling cover to tankers carrying Russian oil. The move is expected to worsen the present oil supply crunch as non-Russian oil producers may not be able to compensate for the lost Russian supplies and meet the EU’s demand for oil within a short span of time.

Under pressure from major oil importers, OPEC Plus last week agreed to raise production by 6,48,000 barrels a day in July and August, a jump of about 50% over the monthly increase set last year under a deal. OPEC Plus countries, which control more than 50% of the world’s crude supplies, had joined hands to cut down oil production by 10 million barrels a day in 2020. The decision was taken amid falling oil prices as demand for oil fell drastically due to COVID-19 lockdowns across the world. It is feared that as the global economy gets back on its feet, the failure of OPEC Plus countries to increase output quickly enough to pre-pandemic levels could cause oil prices to stay high.