OPEC+

OPEC+ was formed in 2016 as an alliance between OPEC and 10 other oil producers to address declining oil prices due to US shale oil growth.
- OPEC+ includes the OPEC members plus Azerbaijan, Bahrain, Brunei, Kazakhstan, Malaysia, Mexico, Oman, Russia, South Sudan, and Sudan.
- The OPEC and OPEC+ countries combined produce about 60% of global oil production.
- What is OPEC?
The OPEC is a permanent intergovernmental organization founded at the Baghdad Conference, in 1960 by Iran, Iraq, Kuwait, Saudi Arabia, and Venezuela, headquartered in Vienna, Austria.
- OPEC currently has 12 members, including Algeria, Iran, Iraq, Kuwait, Libya, Nigeria, Saudi Arabia, UAE, and Venezuela.
- OPEC works to coordinate oil policies among member countries to ensure stable prices, steady supply to consumers, and fair returns for investors.
- OPEC nations produce about 30% of the world’s crude oil, hold 80% of proven reserves, and account for nearly half of global exports, with Saudi Arabia as the largest producer among the OPEC.

Global Oil Demand:

Weakening Global Oil Demand: The International Energy Agency (IEA) expects global oil demand to grow only 0.73% in 2025.
- The “peak demand” theory (the idea that global oil demand will reach its highest point and then permanently decline) is gaining credibility, with indicators like a global economic slowdown, rising EV adoption, and stronger climate action.
  - These trends, compounded by disruptions such as the US tariff war, have led to reduced global GDP (S&P Global forecasts global GDP growth of just 2.2% in 2025 and 2.4% in 2026 weakest since the 2008 crisis) and trade forecasts.
- As a result, oil demand may plateau, and prices may not rebound even if supply constraints ease.
Trade Risks: World Trade Organisation (WTO) predicts a 0.2% annual decline in global trade in 2025. This may cause oil prices to remain subdued despite supply cuts, challenging traditional supply-demand price mechanisms.
Sanctions and Supply-Side Constraints: Key oil producers like Russia, Iran, and Venezuela are under US sanctions, reducing their export capacity (a situation that may change if sanctions are lifted).

India’s Growing Oil Demand: India is the world’s 3rd-largest crude importer (after China and the US) with demand growth early four times the global rate.
- India is expected to contribute nearly 25% of global crude demand growth in 2025 and become the primary demand driver until 2040.
Short-Term Benefits: Lower crude prices can reduce India’s import bill, with every USD 1 drop in oil prices saving roughly USD 1.5 billion annually.
Long-Term Risks: Lower oil revenues can weaken the economies of key Gulf trading partners, reducing bilateral trade, investments, and tourism.
- It could lead to possible job losses for over nine million Indian expatriates in the Gulf, threatening remittance inflows (approx USD 50 billion), which support India’s balance of payments.
- Tax revenues linked to oil and gas sectors also reduce, impacting government finances.
Need for Diversification: India faces the strategic imperative to reduce hydrocarbon dependence and develop new growth drivers to mitigate risks from volatile oil markets.