Planet & Profit

OPEC may feel like an exclusive club of oil monarchies, but its decisions ripple through Indian pumps, power plants and policy rooms. For India—third-largest oil consumer—OPEC’s output swings dictate import bills, rupee swings and the pace of green transitions.

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1. Birth of a Cartel

In 1960, five oil-exporting nations—Iran, Iraq, Kuwait, Saudi Arabia and Venezuela—met in Baghdad to form OPEC (Organization of the Petroleum Exporting Countries). Their goal: counter Western oil majors’ dominance and stabilize prices through coordinated output targets. Over 65 years, OPEC has grown to 13 members, wielding control over roughly 40% of global oil supply (pre-2025) and influencing benchmarks like Brent and WTI.

2. The Modern OPEC+ Era

Post-2016, OPEC expanded its toolkit by partnering with non-OPEC producers—most notably Russia—forming “OPEC+.” This coalition accounts for nearly half of world crude output and now adjusts supply not only to curb price collapses, but to defend market share against booming U.S. shale and rising production in Brazil, Guyana and Canada.reuters

3. Why OPEC Matters to India

India imports over 85% of its crude needs and consumed an average 5.55 million barrels per day in 2024—making it the third-largest consumer after the U.S. and China. OPEC’s share of India’s imports has ebbed and flowed:economictimes

• After peaking at 64.5% in FY 2021-22, OPEC’s share fell to 49.6% in 2023 as India chased discounted Russian barrels under G7 price caps.seaandjob
• A modest rebound to 51.5% occurred in 2024, driven by tightening Russian supplies and refiners’ seasonal demand.seaandjob
• Separately, a Reuters study pegs OPEC’s proportion at a record low 48.5% in FY 2024-25 amid sustained Russian volumes—underscoring how geopolitics can reroute India’s crude map.reuters

4. Output Hikes, Price Impact

Throughout 2025, OPEC+ has steadily unwound production cuts to reclaim market share. Between April and August alone, they added over 1.6 million bpd—nearly 2.4% of global demand—without collapsing prices, which have held near $70/barrel. Yet the International Energy Agency warns of a “bloated” market in 2025–26, forecasting supply growth outpacing demand by up to 3 million bpd. For India, every $1 rise in Brent can inflate the annual import bill by over $1 billion, pressuring the current account and rupee.reuters+1

5. Demand Dynamics in India

OPEC’s own Monthly Oil Market Report projects India’s oil demand to grow by 3.4% in 2025 (to 5.74 million bpd) and 4.3% in 2026—double China’s pace—driven by transport fuels and petrochemical feedstocks amid robust growth in manufacturing and infrastructure. Diesel demand, powered by road expansion and rural churn, remains the main driver.economictimes

6. Strategic Diversification

To soften OPEC’s sway, India has pivoted:

• Russian Discounter Play: Buying ~36% of its crude from Russia in 2024–25, exploiting discounts under the G7 price cap.reuters
• Non-OPEC Sourcing: U.S. imports jumped 51% in H1 2025, while Brazil’s rose 80%, as refiners prep for tariff talks—reflecting a strategic tilt toward U.S. shale and South American supplies.energy.economictimes.indiatimes
• Middle East Return: With Russian discounts narrowing, Saudi Arabia and Iraq are gaining renewed traction, leveraging India’s five million bpd refinery capacity under newer term-contracts.economictimes

7. The Green Transition Quandary

OPEC revenue underwrites sovereign budgets across West Asia. As India races toward net-zero by 2070, balancing energy security with decarbonization is vital. Higher fossil import bills can slow green investments, underscoring the push for renewables, electric mobility and hydrogen—yet oil demand will likely stay robust through the decade.

8. Learning from the Cartel

India’s policy playbook can draw from OPEC’s cohesion—and its pitfalls:

• Coordination Matters: OPEC’s production cuts in 2020 helped avert a price crash. India’s strategic petroleum reserves and fuel-pricing stabilization funds serve a similar purpose in shielding consumers.
• Market Signals: OPEC’s incremental output tweaks communicate intent. India’s open-access gas‐trading exchanges and real‐time power markets are analogues fostering transparent pricing.
• Geopolitical Flexibility: Just as OPEC+ adapts to sanctions on Iran and Russia, India must nimbly reroute sourcing in crises—be it rapid LNG imports or strategic fuel swaps with Southeast Asian neighbours.

9. The Road Ahead

OPEC will remain a key arbiter of oil market stability—but never immune to internal rifts (e.g., production disputes between Saudi and UAE) or external shocks (economic slowdowns, energy transitions). For India, the mandate is clear: diversify supplies, deepen strategic reserves, and accelerate clean energy rollouts to mitigate OPEC’s swings—transforming vulnerability into resilience on the global oil chessboard.