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बेसिक इंग्लिश का दूसरा सत्र (कक्षा प्रारंभ : 22 अक्तूबर, शाम 3:30 से 5:30)
Q. OPEC's deal on oil production: Comment on recent OPEC meeting on oil productions.
Oct 03, 2016 Related to : GS Paper-3

Ans :

Introduction-

OPEC (Organization of the Petroleum Exporting Countries) is an intergovernmental organization of 14 nations, founded in 1960. The 14 countries accounted for an estimated 43% of global oil production and 73% of the world's proven oil reserves, giving OPEC a major influence on global oil prices.

In news-


In recent OPEC meeting held in Algeria, the OPEC countries has reached an agreement to trim the cartel’s collective output by about 700,000 barrels a day. This agreement is seen as an effort to balance supply and demand in the global oil market.

Issue-

  • Since last two year, there is continuous fall in global crude oil prices. For example Brent prices fallen by more than halve from about $103 a barrel in end-August 2014 to $45.45 a barrel on September 1 this year.
  • Heavy production of crude oil by all the countries resulted into fall in crude oil prices. It has hurt the economies of these countries.
  • In this background the OPEC countries have reached to meaningful consensus on production cuts.

Analysis of deal-

  • In the backdrop of continuous fall in crude oil prices, these countries are facing huge economic crisis. Recent decision reflects how desperate the situation had become for most oil-producing economies.
  • The recent output cut, announced for the first time in eight years, is a tacit admission that pumping more than demand oil approach has hurt economies of these countries.
  • All these oil producing countries experiencing high fiscal deficits and they are desperate to find solution to address these issues.
  • With demand growth for petroleum slowing far more rapidly than previously predicted, the success of the production curbs in reviving oil prices will significantly hinge on cartel discipline, something that has often been lacking in the past.

Conclusion-

Though petroleum is limited natural resource, but in a recent period world has witnessed huge production of oil. It has brought down the oil prices in a global market and has hurt economies of oil manufacturing companies. Recent agreement is to find solution to these problems, and definitely in will bring discipline among these countries.


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