OPEC and India’s Oil imports

About OPEC

• It is an intergovernmental organization of 13 nations, founded in 1960 in Baghdad by the first five members (Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela). HQ is in Vienna, Austria.
• It aims to manage the supply of oil in an effort to set the price of oil in the world market, in order to avoid fluctuations that might affect the economies of both producing and purchasing countries.
• The current OPEC members are the following:
  1. South America: Venezuela (Ecuador left).
  2. Africa: Nigeria, Algeria, Angola, Equatorial Guinea, Gabon, Libya, DRC Congo (joined in 2018).
  3. Asia: Iran, Iraq, Kuwait, UAE, Saudi Arabia (the De facto leader).
  4. Former OPEC members are Ecuador, Indonesia and Qatar.
• OPEC membership is open to any country that is a substantial exporter of oil and which shares the ideals of the organization.
• They have an estimated 44% of global oil production and 81.5% of the world's "proven" oil reserves. India sources about 86 % of crude oil, 75 % of natural gas and 95 % of LPG from OPEC member nations.
• A larger group called OPEC+ was formed in late 2016 to have more control on global crude oil market. Due to the COVID-19 pandemic the demand for OPEC oil has fallen to a 30-year low in second quarter of 2020.

OPEC+

• The non-OPEC countries which export crude oil along with the 14 OPECs are termed as OPEC plus countries.
• OPEC plus countries = Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan.
• India is not a member of OPEC + countries.
• OPEC member countries produce about 40 percent of the world’s crude oil.
• Equally important to global prices, OPEC’s oil exports represent about 60 per cent of the total petroleum traded internationally.
• Saudi and Russia had the three-year alliance of oil producers known as OPEC Plus — which now includes 11 OPEC members and 10 non-OPEC nations — that aims to shore up oil prices with production cuts.

What is the news?

• OPEC’s share of India’s oil imports fell to the lowest in at least two decades in the year to the end of March as overall purchases by Asia’s third-largest economy fell to a six-year low, data obtained from industry and trade sources showed.
• Total crude imports by the world’s third-biggest oil importer fell to 3.97 million barrels per day (BPD) in FY21, down 11.8% from a year earlier, data showed.
• India bought more U.S. and Canadian oil at the expense of that from Africa and West Asia, reducing purchases from members of the Organization of the Petroleum Exporting Countries (OPEC) to about 2.86 million BPD and squeezing the group’s share of imports to 72% from about 80% previously. That is the lowest share since at least FY02, before which crude import data is not available.
• U.S. and Canadian oil accounted for about 7% and 1.3% respectively of India’s imports compared to 4.5% and 0.60% a year earlier.
• The U.S. emerged as the fifth-biggest supplier, up two places from FY20.