OPEC and its allies led by Russia agreed to gradually withdraw COVID-19 related production cuts by September 2022.
Background
In April 2020, the OPEC+ group had entered into a two-year agreement which entailed steep cuts in crude oil production to deal with a sharp fall in the price of crude oil as a result of the COVID-19 pandemic.
In April 2020, the price of Brent crude hit an 18-year low of under $20 per barrel as economic activity around the world came to a standstill as countries dealt with the COVID-19 pandemic.
The New Deal
OPEC+ will increase overall production by 4,00,000 barrels per day every month. It will go on till the remaining portion of the group’s 10 million barrels per day production cut announced in April 2020 is completely reversed.
The decision also ends a standoff between the UAE and other OPEC+ countries on tying an extension of the supply agreement to increases in production.
The OPEC+ decision on withdrawal of production cuts includes an extension of the production agreement (which was set to expire in April 2022) to September 2022 and also provides for increases in reference production levels for Saudi Arabia, Russia, UAE, Kuwait and Iraq.
OPEC & OPEC+
Headquartered in Vienna, Austria, it is a permanent, intergovernmental organization created at the Baghdad Conference in 1960 by founding members Iran, Iraq, Kuwait, Saudi Arabia and Venezuela.
As on date, OPEC members include Algeria, Angola, Congo, Equatorial Guinea, Gabon, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, United Arab Emirates and Venezuela.
OPEC's objective is to co-ordinate and unify petroleum policies among Member Countries, in order to secure fair and stable prices for petroleum producers; an efficient, economic and regular supply of petroleum to consuming nations; and a fair return on capital to those investing in the industry.
OPEC+ Countries
The non-OPEC countries which export crude oil - include Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan and Sudan.
