Oil industry

The oil industry has been suffering its deepest downturn in over two decades and needs a shot at revival. It is, therefore, imperative that the next meeting of the Organisation of the Petroleum Exporting Countries (OPEC) in Vienna on November 30 reaches a deal to limit supply as was proposed in September. Oil is trading at near $50 level in anticipation of an agreement. A cut of 4 to 4.5 per cent for all members would work best and bring the current output down by 1.2 million barrels per day. This will be good to prop up the oil price to above $50 in the coming months. However, the success of such an agreement hinges on Iran and Iraq, who are currently not showing any inclination of slowing down production to regain their market shares which fell due to economic sanctions and conflict respectively. Iran, which was recently freed from sanctions after the nuclear deal with the West, is seeking exceptions, and so is Iraq.

Persistent low oil prices haven’t helped bolster the economic engines of the world. On the contrary, low oil prices have complicated the conduct of monetary policies and also fuelled unanchored inflation expectations.