Oil cartel OPEC's decision to taper production cuts starting August spells good news for major oil consuming countries like India that imports 85 per cent of its domestic oil requirements.
Higher production by OPEC could help balance oil prices that have remained high off late on the back of normalising economic conditions globally and rising oil demand.
Benchmark Brent crude touched two year high level of $77 a barrel just couple of weeks back. It had since then softened a bit to stay around $73 a barrel now.
As per reports, OPEC on Sunday reached an agreement where all major oil producers of the cartel and outside countries including Russia (OPEC+) would see a rise in their production limits. Five countries including Saudi Arabia, UAE, Kuwait, Iraq and Russia will pump in an extra 400,000 barrels of oil per day into the market each month between August and December. So by the end of the year, the production would rise by two million barrels of oil per day.
This level of production is expected to stabilise oil prices though OPEC feels that with opening of global economies and vaccinations, oil demand would rise that would help to maintain oil prices.
Doubts surfaced earlier this month over agreement on production levels to be maintained by OPEC countries following news of differences surfacing between Saudi Arabia and UAE. But, this seems to have been resolved now as all members have agreed to raise their production limits.