Changing trends?: on the global
Mains Paper 3: International Relations
Prelims level: Brent crude
Mains level: Bilateral, regional and global groupings and agreements involving
India and/or affecting India's interests Effect of policies and politics of
developed and developing countries on India's interests
- Saudi Arabia signalled its discomfort with the falling prices and
hinted at a fresh cut of one million barrels a day.
- The benchmark Brent crude, which slipped below the $70 a barrel
mark last Friday, reacted sharply on Monday, rising to above $72.
- That prompted a tweet from U.S. President Donald Trump asking for
lower prices, and so, on Tuesday prices again fell to below $69!
- The price of Brent crude, which had risen over the $85 mark in
early October, is down by about 20% from its October peak.
- Saudi Arabia’s latest call to cut output comes just months after
the OPEC cartel decided to increase its output.
Decisions has been taken by OPEC members
- OPEC members decided to ramp up supply after apprehensions over
Iranian supplies in the wake of economic sanctions imposed by the U.S. Since
- The U.S. has granted a temporary waiver to eight countries,
including major buyers India and China, to continue importing oil from Iran
for at least the next six months.
- The way prices have responded to OPEC’s output decision, however,
suggests that it may still be too early to dream about higher prices in the
- A crucial meeting between the cartel and its allies in the first
week of December will decide the 2019 output level. That might well set the
trend for oil prices in the new year.
- This price action suggests that markets could probably still be
worried about the risks of any kind of sustained rise in oil prices.
- For one, strong U.S. opposition to higher oil prices could be
making investors feel jittery.
- Mr. Trump’s tweet on Monday, for instance, negated the bullish
influence of OPEC’s announcement almost immediately.
- The increasing output of shale is another significant threat to
- The U.S. Energy Information Administration last week predicted
that American crude output would increase at a higher pace than expected and
lead to lower prices next year.
- This is not at all surprising because U.S. shale producers have
traditionally increased their output in response to higher oil prices.
- Also, producers like Russia have been non-committal on any
significant production cut.
- Any slowdown in global economic growth is another risk factor that
may weigh down oil.
Q1. The term 'Asian premium' refers to
(a) a world famous rice variety found in Asia.
(b) a type of insurance contract leading to slowdown in Asian financial markets.
(c) Asian countries being charged high oil prices by Gulf suppliers.
(d) highly educated skilled workers from Asia.
Q1. A meeting of OPEC and its allies in December will decide the future
course of oil prices. In this context how the meeting will impacted on India to
control oil price.