OPEC oil gang suffered a major setback, import of oil from OPEC reached a 15-year low in India
Oil is gold or maybe even bigger than gold. Oil keeps the economy engine of any country moving. If this flow of energy stops, will the whole country stop the whole world. History has shed a lot for oil. Just imagine what would happen if some countries controlled its global supply chain and established a monopoly? Naturally then the personal interests of your nation will be affected. The same is happening with India. The increase in oil prices arbitrarily by OPEC countries has put the Indian economy in trouble. Due to this, the foreign exchange reserves are decreasing as well as due to the increase in oil prices, inflation is also increasing. But, India has now decided to break their supremacy. India is in touch with non-OPEC countries and imports oil from there.
It is worth noting that non-OPEC countries produce about 60% of the world’s total oil production. India is continuously reducing its dependence on OPEC countries. Recent figures also seem to point in the same direction. You will be surprised to know that the share of OPEC, a group of oil producing countries in Indian oil imports, has fallen in 2021 to the lowest in more than a decade. Also, oil imports from OPEC in India have come down to a 15-year low, which is directly attributed to India’s increasing imports from other countries.
Oil imports from non-OPEC countries increased
Actually, due to the will of OPEC countries, there is a huge increase in the price of oil and gases all over the world. OPEC countries are currently gradually increasing the supply in the global market, due to which the shortage of oil remains persistent. Expensive crude oil is a problem for India. Due to the cost of crude oil, the price of gas including petrol and diesel increases in the country. This increases the freight, due to which the items of daily use from food and drink become expensive. Apart from this, huge amount of foreign exchange is spent on import of crude oil. To curb the arbitrariness of OPEC countries, the Government of India has entered into agreement with non-OPEC countries, as a result of which the figure of imports from OPEC has come down from 87 percent in 2008 to 70 percent last year, which is increasing day by day. And less will happen.
India has increased oil imports from non-OPEC countries Africa, Canada and the US. US sanctions have made it difficult for India to import crude oil from Venezuela and Iran, prompting Indian buyers to turn to the United States, Canada, Guyana and some smaller producers in Africa for supplies. According to the data, India has increased the import of oil from America and Canada. Oil imports from these two countries have seen an increase. Oil from the US and Canada accounted for a record 7.3% and 2.7% respectively in India’s imports, compared to 5.5% and 0.7% a year ago.
India wanted exemption from OPEC countries
It is worth noting that due to the arbitrariness of OPEC, there was a lot of jump in oil prices in all countries. The situation in India is also similar. India is included in the third largest oil consumer list in the whole world. Crude oil demand in India increased from 203 MT in 2015-16 to 214 MT in 2016-17 thus registering a growth rate of 5.5 per cent as compared to the global average growth of 1.6 per cent.
India, being OPEC’s largest, persistent and trusted customer, wanted a rebate on oil imports, while it received a tax called “Asia Premium” from OPEC producing nations. Former Petroleum Minister Dharmendra Pradhan requested for an exemption called “Asia Dividend” by removing this tax many times, then OPEC countries had rejected this request. Now the reduction in imports from OPEC countries also indicates the efforts of the government.
Data shows India’s crude oil imports rose 3.9% to 42 lakh barrels per day (bpd) in 2021, but remained below pre-pandemic levels in 2019. Imports are expected to increase further this year as fuel demand improves. In December, imports rose to an 11-month high of 4.7 million bpd, nearly five per cent higher than in November, but still 7.8% lower than a year ago.
What is OPEC?
The Organization of the Petroleum Exporting Countries (OPEC) is a permanent inter-governmental organization (IGO) created by Iran, Iraq, Kuwait, Saudi Arabia and Venezuela at the 1960 Baghdad Conference. Its purpose is to set the price of oil in the world market and manage the supply of oil, in order to avoid fluctuations in oil prices that can affect the economies of both producer and buyer countries. As of the year 2019, there are 14 member countries of OPEC. Iran, Iraq, Kuwait, the United Arab Emirates, Saudi Arabia, Algeria, Libya, Nigeria, Gabon, Equatorial Guinea, Republic of the Congo, Angola, Ecuador and Venezuela are members of OPEC. At the same time, there are some countries like this, they are oil producing countries, but are not part of OPEC group and now many countries of the world including India are eyeing those countries.
