The global oil market is going through tremendous turmoil these days. OPEC, the organization of oil producing countries, has taken a big decision amid the ongoing tension and supply disruption in West Asia. Seven member countries have announced to increase oil production for the month of June, but meanwhile the news of UAE leaving the organization has created new concerns in the market.
The major member countries of OPEC (Saudi Arabia, Russia, Iraq, Kuwait, Kazakhstan, Oman and Algeria) together have decided to increase production by 1.88 lakh barrels per day (bpd) for June. The purpose of this step is to stabilize the supply of oil in the global market, as crude oil prices have increased rapidly in recent times.
Silence on UAE’s exit, suspense increased
However, the most surprising thing in this meeting was that there was no official discussion on UAE’s exit from OPEC. Experts believe that this silence points to the ongoing differences within the organization. UAE’s exit is considered a big blow for OPEC, because it is one of the major oil producers.
Strait of Hormuz becomes the biggest challenge
The biggest impact on oil supply has been the ongoing conflict in the Strait of Hormuz. Due to the blockade imposed by Iran, the supply of oil and gas has almost come to a standstill. In such a situation, OPEC’s decision to increase production seems big on paper, but its impact on the ground may be limited.
expert opinion
Experts say that this step of OPEC is actually to send a message to the market that the organization is still in control. However, increasing actual supply is difficult unless geopolitical tensions ease. Crude oil prices may rise further due to war and supply disruptions in West Asia. This will have a direct impact on economies around the world, especially on importing countries like India, where there is a danger of rising inflation.
