The world’s third-largest oil importer, India, is concerned that Thursday’s OPEC + decision not to cease oil production in April could hurt the consumption-led recovery in oil demand, the Indian said. Petroleum Minister Dharmendra Pradhan Friday to Reuters.
“As one of the largest countries consuming crude oil, India is concerned that such actions by producing countries could undermine the consumption-led recovery and hurt consumers even more, especially in our price-sensitive market,” Pradhan told Reuters.
On Thursday, the OPEC + group surprised the market by deciding not to end collective crude oil production from April and leaving only minor exemptions to Russia and Kazakhstan, as at the January meeting.
So from April onwards, the alliance will not only keep production largely unchanged – with the exception of Russia increasing production by 130,000 bpd and Kazakhstan by 20,000 bpd – but Saudi Arabia will also keep its additional 1 million bpd. April, which further tightened the market.
The surprise move from OPEC + on Thursday pushed oil prices up 5 percent, with Brent close to $ 68 and WTI Crude well above $ 64 a barrel.
India, which depends on imports for about 80 percent of its oil consumption, has been unsettled in recent weeks over higher oil prices, which pushed up its oil import bill and domestic inflation.
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Earlier this week, India again called on the OPEC + group to boost production, saying it does not support “artificial cuts to keep the price up”.
As oil prices rebounded to their 13-month highs, India began calling on OPEC + as early as January to consider the effects of higher oil prices on consumption in recovering economies.
During the fall in oil prices last year, India replenished its strategic petroleum reserves with oil at $ 19 a barrel, saving nearly $ 700 million, India’s Ministry of Petroleum and Natural Gas said in September 2020.
Oil above $ 60 is certainly painful to India’s import bill and consumers and could undermine the recovery of one of the world’s major markets driving oil demand.
By Tsvetana Paraskova for Oilprice.com
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