New Delhi: India has appealed to key oil producers to increase supply to check rising prices that have begun to hurt consumers and the economic recovery.
“It is in this interest of allowing demand recovery to take primacy over crude prices at least over the next few months, I’m appealing for easing of production cuts by the key oil-exporting countries including OPEC and OPEC plus group,” petroleum and natural gas minister Dharmendra Pradhan told a virtual gathering that included Saudi oil minister Abdulaziz bin Salman Al Saud, OPEC secretary-general Mohammad Sanusi Barkindo and International Energy Agency chief Fatih Birol.
Oil prices have gained 70% since the beginning of November 2020, rising above $64 a barrel on Wednesday, driven by a combination of supply cuts by key producers, a global rollout of Covid-19 vaccine and easy money supply. This has led to retail pump rate for petrol in India breaching the 100 a litre mark.
A surprise voluntary cut of additional one million barrels a day of production by Saudi Arabia and extended supply cuts by Russia and other members of the so-called OPEC plus grouping appear to have been the primary driver of the oil rally in recent months, which has sent fuel prices to record levels in India, mounting pressure on the revenue-starved government to cut taxes.
“The price-sensitive Indian consumers are affected by rising petroleum product prices. It also affects demand growth,” Pradhan said while reminding producers that India was supportive of production cuts last year when Covid created massive demand destruction and a difficult situation for producing countries. “I have always maintained that the prices should be reasonable and responsible, which means that we do not favour too low crude price also.”
Pradhan said there was an “urgent need to allow consumption-led recovery”. “The rising crude oil price during the last few weeks is hurting the gradual global economic recovery due to the significant demand contraction, which might even mirror the impact of Covid-19 in its initial stages,” he warned.