Oil prices have risen a lot in the last few months, since August 2022 the OPEC and OPEC+ group of oil exporters have decreased their oil production by 5% which resulted in a 34% hike in oil prices around the world. The price of a single barrel of oil in August 2022 was $72/bbl while the oil price in September 2023 was $97/bbl.
In an attempt to tackle the issue, Indian oil minister Hardeep Singh Puri held a meeting with OPEC Secretary General Haitham Al-Ghais where he urged for “balancing global energy markets by ensuring that crude oil prices do not outstrip the paying ability of the consuming countries”.
India is one of the biggest oil consumers in the World and 85% of that oil comes from imports. So cutting oil production severely affects the energy security situation of India. Puri also suggested that high oil prices can slow down the post-COVID economic growth of various countries which can result in low oil demand hence creating an environment like the 2008 collapse.
In total, OPEC plans to cut the oil production by 3.66 barrels per day and this production cut can continue throughout 2024. OPEC+ is a larger group of OPEC nations plus Russia and a few other nations and their oil production accounts for more than 40% of oil production in the World. Saudi Arabia and Russia are the 2 biggest oil producers in the group and both of them are pushing the production cut.