Oil price expected to be reasonable, high prices hampering global economic recovery: India to OPEC

India, the world’s third-largest energy consumer, has told Saudi Arabia and other OPEC countries that high oil prices will hurt the burgeoning economic recovery the world is witnessing after the devastating pandemic and that they must set the price of oil at reasonable levels, a senior official said Monday.

Gasoline and diesel prices have reached record highs across the country after relentless price increases since early May.

India, which imports nearly two-thirds of its oil needs from West Asia, has told crude oil producers, including the Organization of the Petroleum Exporting Countries (OPEC), that high oil prices will accelerate the economy. transition to alternative fuels and that such rates would be counterproductive for producers, the official said.

“Oil prices must strike a balance between the interests of producers and consumers. At the moment, they are really high because demand is greater than supply,” said the official, who wished to remain anonymous. .

International oil prices collapsed to $ 19 a barrel in April last year as demand evaporated, with most countries blocking containment measures to control the spread of COVID-19. Demand has picked up again this year as vaccination against the infection has boosted economies around the world.

International benchmark Brent crude has since rebounded to $ 85.67 per barrel.

Oil Minister Hardeep Singh Puri in recent weeks reported the problem of high oil prices to Saudi Arabia, United Arab Emirates, Kuwait, Qatar, United States, Russia and Bahrain, said the manager.

Puri, in his meetings with the OPEC Secretary General and his counterparts in Saudi Arabia and other countries, expressed India’s serious concerns about the volatility of crude oil prices.

He expressed India’s strong preference for responsible and reasonable prices that are mutually beneficial for consumers and producers, the official said.

India is likely to raise the issue of high oil prices again when world leaders meet for the Indian Energy Forum by CERAWeek later this week. Saudi and Emirati oil ministers as well as the OPEC secretary general are expected to attend the meeting.

“He (Puri in his previous meetings) has expressed unequivocally the need for oil prices to be stable and within limits, otherwise the economic recovery seen around the world will suffer,” the official said, adding oil prices. oil above 65-70 USD. per barrel will hurt importing countries.

While the world has started the transition to cleaner fuels such as electric vehicles and hydrogen, most countries still depend on oil to power their economies. Therefore, high oil prices will affect the recovery in demand.

India relies 85 percent on imports to meet its oil needs and relies on overseas shipments to meet 55 percent of its gas needs.

It is the only country that is experiencing sustained growth in demand for oil and without it producers will suffer as well, the official said.

Not only the price, India also wants better trading terms, such as optional volumes in annual supply contracts and a longer time to pay for oil purchased.

State-owned oil companies have forward contracts – guaranteeing a fixed volume of oil per year – with national oil companies in West Asian countries for the import of crude oil. They want favorable terms like the inclusion of optional quantities in futures contracts and the improvement of the credit limit to oil PSUs in the import of crude oil.

Most oil exporters such as Saudi Arabia and Iraq provide a 30-day credit period, i.e. payment for purchased oil must be made within 30 days.

India would like this period to be extended. Iran, before US sanctions halted exports in 2019, granted a 90-day credit period.

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