Why OPEC Snubbed Indian Request For Crude Purchase?
The Centre has been snubbed really rude by the OPEC consortium asking it to use the cheap oil it bought last year. It is no wonder that the oil prices went up internationally after India was snubbed.
Apparently, OPEC is awaiting demand to go up before it can start to increase its production. Brent crude, the most widely used benchmark, rose three days ago, nearly 1 percent to $ 67.44 a barrel after the Organization of the Petroleum Exporting Countries (OPEC) and its allies agreed not to increase supplies till April 2021.
According to India’s Oil Minister Dharmendra Pradhan, international oil prices would do nothing good but hurt economic recovery and demand in India. In his interaction with the OPEC members, he did urge the producers’ group to ease production curbs to fulfil their promise of stable oil prices to India.
In response, Saudi Arabian energy minister Prince Abdulaziz bin Salman did suggest that India would do better to go into its cheap oil reserves at the moment. In April-May 2020, India had purchased 16.71 million barrels of crude and filled all of its three Strategic Petroleum Reserves created at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka. The average cost of that crude purchase was $ 19 per barrel, according to Pradhan’s written reply to a question in Rajya Sabha on September 21, 2020.
As demand for crude is coming back to normal, Pradhan has said that he would like India to provide with reasonably priced crude to its customers. While India had supported in 2019 OPEC’s decision to cut crude production, its request should not fall on deaf ears.
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India continues to be the world’s third-biggest oil importer and consumer. Its decision to support the cut was in view of the fact that oil demand was collapsing due to the spread of Covid-19.
Retail petrol and diesel prices, which already are at historic highs will rise if the oil companies decide to pass on the surge in international oil prices to consumers. India has been able to maintain its pricing, even in the run of elections in Uttar Pradesh and Gujarat.
