4 min read.Updated: 19 Oct 2021, 12:39 AM ISTLivemint
India has been requesting the oil cartel to increase production amid record high prices
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NEW DELHI :
Reeling under high transportation fuel prices, India will raise the issue of high crude oil prices with Organisation of the Petroleum Exporting Countries (Opec) secretary general Mohammad Sanusi Barkindo during his upcoming visit to India. The discussions will also focus on the need for finding a balance between the needs of suppliers and consumers, said a senior Indian government functionary requesting anonymity.
The oil cartel’s head will be in New Delhi for CERAWeek’5th India Energy Forum that starts on 20 October that will also see participation from the energy ministers of major oil and gas procuring economies. India, the world’ third largest oil importer has been requesting the Opec- plus grouping to up production but to no avail, even as the petroleum product prices are at a record high in India.
“Price and balance between suppliers and producers’ interest will be at the top of the list for discussion with Opec secretary general. India has been raising this issue with anyone who has anything to do with energy prices," said the Indian government functionary cited above.
India has been raising the issue with major oil producing countries such as Saudi Arabia, Kuwait, Qatar, UAE, Bahrain, US, and Russia. India is dependent on imports to meet 85% of its oil demand and 55% of its natural gas requirements.
The functionary added that India’s message to the Opec’s ministers will focus on the fact that high oil prices are also not in their favour given that with oil prices going through the roof, economic recovery will suffer in turn tempering down energy demand. The Opec accounts for a majority of India’s crude oil imports and around 40% of global production.
A spokesperson for India’s ministry of petroleum and natural gas declined comment.
In a related development Prime Minister Narendra Modi will also meet chief executive officers (CEOs) of top global and Indian oil and gas major. This is the sixth such meeting that the Prime Minister will hold with CEOs of energy majors.
Global energy markets are in frenzy with a spike in energy prices across fuel sources such as crude oil, gas and coal. India is particularly at a disadvantage as any increase in global prices can affect its import bill, stoke inflation and increase its trade deficit. This inadequate supply also comes at a time when global oil demand is rising due to global economy’s revival amidst vaccination drives being carried out and increasing preference for personal mode of transportation due to coronavirus pandemic.
Petrol and diesel are selling at a record high of ₹105.84 and ₹94.57 per litre, respectively, in Delhi at Indian Oil Corp. Ltd outlets. On Monday, Brent was trading at $84.80 a barrel and West Texas Intermediate at $82.41 a barrel at press time. The cost of the Indian basket of crude, comprising Oman, Dubai and Brent crude, was at $83.51 per barrel on 15 October.
This comes at a time when there is a growing clamour for the Centre to cut fuel taxes. The average share of central excise duty on petroleum products was 12% in the gross revenue collection for the period 2017-18 to 2020-21. The central excise duty collected from petroleum products for 2018-19, 2019-20 and 2020-21 is Rs2.35 trillion, Rs1.97 trillion and Rs3.44 trillion respectively.
“While at the time of India’s lockdown to prevent the spread of corona virus pandemic, the crude oil prices had plunged as there was more oil available than there was demand. India’s consumption is now 15–16% higher than the pre covid level. The prices have gone up significantly," said Indian government functionary cited above.
There has been a complete change of scenario after the rout in crude oil prices in April last year with Brent nose diving below 2001 level, far lower than what was witnessed post the 9/11 terrorist attacks and WTI entering negative territory. This had triggered fears of a full-blown recession and had sent shock waves across the oil producing major economies such as that of West Asia and Russia, given that the loss of revenue threatened to alter the geo-politics.
India has also been requesting Opec for a reduction in official selling price, extension of credit period from existing 30 days to 90 days from bill of lading, freight discount and open credit based on credit worthiness of Indian state-run refineries. India, which is one of the major Opec consumers, has called for a global consensus on “responsible pricing". Also, India has consistently been pitching for a price and terms correction on the so-called Asian premium. With most Asian countries being primarily dependent on West Asia to meet their energy needs, customers from the continent are seen paying the Asian premium as compared to the prices paid by the US or the European Union.
Also, a ministerial on Indo Pacific as a prime area for energy interdependence has been planned, that is expected to see participation from ministers of Australia, Maldives and Bangladesh and deputy ministers of Timor-Leste and Indonesia. US is seeking a bigger role for India in stabilizing and maintaining the rule of law in the Indo-Pacific region—a large swathe of land and sea stretching all the way from the west coast of the US to the shores of east Africa, even as the Quad comprising of India, the US, Japan and Australia has ramped up its engagements to contain China.
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