With OPEC ignoring India’s calls over oil output cuts oil prices rise 2%, road to economic recovery may face hurdles
On Friday, India – the third-largest consumer and importer of oil in the world – said that major oil producers’ decision of extending output cuts as oil prices continue to escalate can pose a threat to economic recovery in many nations.
OPEC+, the Organization of the Petroleum Exporting Countries) and its allies came to an agreement on Thursday of not increasing oil supply in April while the await a more considerably large amount of demand recovery as nations continue to grapple with the coronavirus pandemic crisis.
As a reaction to OPEC’s decision, oil prices took a jump of over 2% on Friday, marking a 14 months high.
“As one of the largest crude-consuming countries, India is concerned that such actions by producing countries have the potential to undermine consumption-led recovery and more so hurt consumers, especially in our price-sensitive market,” said Minister for Petroleum and Natural Gas Dharmendra Pradhan.
“The decision by OPEC+ has saddened us. It is not good news for India, China, Japan, Korea, and other consuming nations,” Mr. Pradhan added.
India has been substantially hit by the oil prices soar and has urged the OPEC nations to ease output cuts and enable economic recovery globally. Demand-driven recovery in India is under threat from this decision as oil prices pose a fiscal challenge for the nation. India imports about 84% of its oil from Middle Eastern nations and relies on them heavily for oil supplies.
“We still appeal to the oil producers for an alternative to be found. Pushing us (consuming nations) is not in the interest of both sides. High oil prices could benefit a group of producing nations, but if you push customers that could lead us to find alternatives,” Pradhan noted.
Saudi Energy Minister Prince Abdulaziz bin Salman responded on Thursday to India’s repeated calls to ease output cuts. He said Inia must start using the oil it had bought at cheap rates last year.