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News India Live, Digital Desk: There is currently a news in discussion in the global energy market which has shaken the politics of crude oil. Organization of Oil Exporting Countries by United Arab Emirates (UAE) OPEC Analyzes have intensified regarding the possibilities of leaving India. If this happens, it will not only be a major blow to this Saudi Arabia-led organization but will also have a deep impact on oil prices all over the world and the economy of countries like Pakistan.
Why does UAE want to leave OPEC?
There have been differences of opinion between the UAE and OPEC’s most influential member Saudi Arabia for some time regarding ‘Production Quotas’:
Increase in production capacity: The UAE has invested billions of dollars to increase its oil production capacity. It wants to further strengthen its economy by selling more oil.
OPEC restrictions: OPEC is currently cutting production to keep prices high, which is going against the UAE’s economic interests.
Economic Diversification: The UAE wants to raise funds for plans like its ‘Vision 2030’, which requires it to export more oil.
Big challenge for Saudi Arabia
Saudi Arabia is the undeclared leader of OPEC. If UAE pulls out, then:
The credibility of the organization will fall: After Angola and Qatar, the departure of a big producer like UAE will significantly reduce the strength of OPEC.
Price War Situation: Removing the production limit could lead to an excess of oil in the market, which would affect Saudi Arabia’s revenue.
What will be the impact on Pakistan?
This news is for Pakistan, which is already struggling with shortage of foreign exchange reserves and inflation. ‘double edged sword’ As it is:
Fall in prices (profit): If OPEC splits and the UAE increases production, crude oil prices may fall in the global market. This will reduce Pakistan’s import bill and petrol and diesel may become cheaper.
Diplomatic crisis (loss): Pakistan has deep relations with both Saudi Arabia and the UAE. The growing tension between these two countries may make Pakistan diplomatically uncomfortable, as it is dependent on economic help (loans and investments) from both.
future of the global oil market
Experts believe that UAE’s exit ‘Oil Economy’ This could be the beginning of a new era. This will further strengthen the position of non-OPEC countries like America and Russia. If the supply of oil increases in the market, developing countries like India and Pakistan can get major relief from inflation.