West Asia conflict: Russia to not quit OPEC+. What impact will it have on India?

West Asia conflict latest: Kremlin spokesman Dmitry Peskov said on Wednesday that Russia will not leave the OPEC+ grouping of oil-producing nations, adding Moscow will stay in the group. Speaking to reporters, he said that the existing agreements within the OPEC+ have proven effective in managing global oil markets. 

"The Russian Federation hopes to preserve the OPEC+ format after the UAE leaves, since these agreements make it possible to stabilize the markets," Peskov said.

At present, Russia is a member of the OPEC+ grouping of nations and has been coordinating its policies with OPEC members. 

It is also seen as the main beneficiary of the spike in global oil prices due to the ongoing conflict in West Asia involving Israel and the US on one side and Iran on the other.

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UAE quits OPEC, eyes increased oil production

The development comes almost a day after the UAE on Tuesday announced its decision to quit OPEC. Effective May 1, the country will be free from OPEC's production limits and can ramp up crude output to meet its full capacity.

After quitting the grouping of oil-producing nations, the UAE would be able to pump at will, and Abu Dhabi has set a production target of 5 million barrels per day by 2027.

Analysts have predicted that once Hormuz reopens, the UAE would "produce as much oil as it can, utilising any spare capacity it has held back". The UAE Energy Minister, however, asserted that a rise in production will not happen "tomorrow".

What did Russia say about the UAE leaving OPEC?

Commenting on this, Russian Finance Minister Anton Siluanov said that the UAE's decision implies that the OPEC nations would boost oil production, bringing down global prices soon. 

"Today, we hear that ​one of the ‌countries, the United Arab Emirates, is leaving OPEC. What does this mean? It means that the country can produce as ‌much oil as its production ​capacities allow and release it onto the market," Siluanov said.

He added that for now, global oil prices were supported by the ongoing blockade of the Strait of Hormuz. He added that oversupply could be a possibility when the passage opens in the future. 

Will this be an advantage for India in the future?

Due to Russia not leaving and the UAE being freed from the OPEC's quota system, Again Capital's John Kilduff told CNBC that Indian refiners will be able to buy from a bigger, more flexible Gulf supply pool. 

Since India has been buying discounted Russian crude when Western buyers looked the other way, its pre-existing infrastructure, heavily boosted by Russian oil imports, has allowed it to fill the supply gap worsened due to the continuing blockade of Hormuz.

By securing discounted energy, India has so far been able to keep domestic fuel costs stable and shield the national economy from inflationary pressures. 

Moreover, the UAE would now be able to send more oil to India through the strategic Fujairah pipeline, bypassing the Strait of Hormuz completely amid ongoing disruptions in the Persian Gulf.

Indian refiners, who are already familiar with UAE grades like Murban, have already increased imports via Fujairah as the Abu Dhabi Crude Oil Pipeline (ADCOP) feeds both the Fujairah refinery and export terminals.

India and the UAE enjoy a Comprehensive Strategic Partnership that goes beyond oil. At present, the UAE supplies around 10 per cent of India's crude imports and is also a significant LNG provider. 

Due to the UAE's exit from OPEC, Indian refiners can hope for steadier import volumes and possibly better pricing, provided global supply constraints relax.