Important for:

UPSC, Haryana HCS, Punjab PCS
Prelims: OPEC, oil production, crude oil markets
Mains: GS Paper 2 & 3 — International Relations, Energy Security, Economy

Why in News?

The United Arab Emirates has announced that it will exit the Organization of the Petroleum Exporting Countries, citing disagreements over production limits and strategic energy priorities.

What is OPEC?

• A group of major oil-exporting countries
• Formed to:
  👉 Control oil supply
  👉 Stabilise prices

Key Role:

• Influences global oil prices
• Sets production quotas for member countries

Why is UAE Leaving OPEC?

Main Reasons:

• Disagreement over:
  → Production quotas
• UAE wants:
  → Increase oil output capacity
• Strategic shift:
  → Focus on independent energy policy

Global Impact

1. Weakening of OPEC

• Reduced control over global oil supply
• Less bargaining power

2. Increased Competition

• Countries may produce more oil
• Possible price fluctuations

3. Market Uncertainty

• Supply-demand imbalance
• Volatility in oil prices

Impact on India

Positive:

• Potential lower oil prices
• Reduced import bill

Negative:

• Price volatility
• Supply uncertainty

Energy Security Perspective

India is:

• Highly dependent on oil imports

➤ Any change in global oil dynamics:

• Directly affects:
  • Economy
  • Inflation
  • Fiscal balance

Key Insight

➤ OPEC’s declining influence indicates:

• Shift toward:
  • Competitive oil markets
  • Energy diversification

Broader Geopolitical Context

• Middle East energy politics evolving
• Countries pursuing:
  ➤ Independent energy strategies

PRELIMS PRACTICE QUESTIONS

Q1. OPEC is:

A. Military alliance
B. Oil-exporting countries group
C. Trade organisation
D. Financial institution

✅ Answer: B

Q2. UAE is located in:

A. Europe
B. Africa
C. Middle East
D. South America

✅ Answer: C

Q3. Which of the following affects oil prices?

1. Production quotas
2. Supply-demand
3. Weather

A. 1 and 2 only
B. 2 only
C. 1 only
D. 1, 2 and 3

✅ Answer: D

Q4. India imports most of its oil from:

A. USA
B. Middle East
C. Europe
D. Russia only

✅ Answer: B

Q5. OPEC’s main function is:

A. Trade regulation
B. Oil price stabilisation
C. Currency exchange
D. Agriculture

✅ Answer: B

CBL Mains Practice Question

“Changing dynamics within OPEC reflect broader shifts in global energy geopolitics.”
Discuss with reference to India’s energy security. (250 words)

FAQs

1. Why is UAE leaving OPEC?

Due to disagreements over production quotas and desire for independent policy.

2. What is OPEC’s role?

To regulate oil production and stabilise prices.

3. How does this affect India?

Through changes in oil prices and energy security.

4. Will oil prices fall?

Possibly, but volatility may increase.

5. Which GS paper covers this topic?

GS Paper 2 & GS Paper 3.