India to leverage market size for OPEC deals
Sources have confirmed that India would attempt to leverage its market size at the upcoming meeting of OPEC ministers in Vienna, to secure better deals for oil. Oil Minister Dharmendra Pradhan expressed confidence that India's market position and consumption levels would definitely be attractive to OPEC countries. OPEC has also been suffering in the market, due to an upsurge in US shale production.
What is the upcoming meeting about?
The upcoming meeting in Vienna is being held so that the OPEC countries can decide if they want to continue with production cuts or not. They will also discuss the issue of Iran's increased oil output and Washington's success with Shale.
OPEC
The Organization of the Petroleum Exporting Countries, popularly known as OPEC, is a body governed by 14 nations. The organization was founded in Baghdad, in 1960, and is currently headquartered in Vienna, Austria. The 14 nations make up a massive 35% of the world's oil production. Due to this huge stake at hand, it gives OPEC significant influence over global oil prices.
OPEC agrees to output cuts
In December 2016, OPEC agreed to cut oil production in an attempt to stabilize rapidly declining oil prices; the landmark decision was made at a meeting in Vienna. The news of the announcement sent oil prices soaring, with Brent North Sea crude at $50.09 and West Texas Intermediate at $49.08. OPEC decided to lower its monthly output by 1.2 million barrels per day.
India and OPEC
Over 80% of India's crude oil imports come from OPEC countries. Apart from consuming OPEC crude India is also responsible for refining a large volume of crude that comes from OPEC countries, as India is a net-exporter of petroleum products. Indian refineries currently produce 230 million tonnes a year, which is being expanded to 600 million tonnes per year. Hence OPEC cannot ignore India.
What is India's strategy?
Oil Minister Dharmendra Pradhan will be attending the meeting, accompanied by representatives of all major oil refiners from both public and private sector entities. He is expected to cite a recent OPEC report which highlighted that India would be the largest consumer of OPEC's output. He is expected to convey that India can look elsewhere if OPEC cannot give India concessions.
