New Delhi, Jul 19 (IANS): 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 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 years high level of $77 a barrel just a 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 2 million barrels of oil per day.

This level of production is expected to stabilise oil prices though OPEC feels that with the opening of global economies and vaccinations, oil demand would rise which 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.

Any stabilisation of oil prices hereon is expected to benefit countries like India as it will not only help in bringing down the rising oil import bill and will also have a bearing on auto fuel petrol and diesel prices. The fuel prices in the country have risen by over 30 per cent in the last year with increased levels already crossing 10 per cent in FY22 so far. The government is hoping that softer global oil prices may help it to contain fuel prices in the country that also impacts inflation.

OPEC last year reached an agreement to suck out unprecedented 10 million barrels of oil from the market to stabilise oil prices that had crashed to below $30 a barrel early last year. While around 4.2 million barrels of production has been added since then, rising demand has kept the crude price high in recent months.

But with 2 million barrels being added again, and OPEC taking a call on how to raise oil production levels to normal levels by December 2022, oil market could expect some stability hereon.