Oil minister Dharmendra Pradhan (File photo: PTI)
NEW DELHI: India once again pitched for stability in the global oil market and sounded a note of caution against upsetting the fragile demand-supply balance as economies around the world move to get back on their feet.
Amid reports of OPEC lynchpin Saudi Arabia and the grouping’s ally Russia agreeing to extend the deepest-ever production cut deal till July, oil minister Dharmendra Pradhan “congratulated” the grouping for the production cut deal to prop up prices after global benchmark Brent dived to $16/barrel and US crude sank into negative territory.
But, during his talks with OPEC secretary-general Mohammed Barkindo on Wednesday, Pradhan also “highlighted the need for producing and consuming countries to take responsible steps in the coming days to enable the revival of the fragile economic situation globally.”
Pradhan told Barkindo that the gradual economic recovery will revive oil demand growth so care should be taken not to upset the fragile balance between supply and demand achieved so far.
India exploited the recent price collapse to make savings of Rs 25,000 crore, as first reported by TOI on May 5, by filling up its strategic storage with cheap oil. The government also utilised the opportunity to shore up its finances by raising fuel taxes twice without raising pump prices.
Since the higher taxes were not passed on to consumers, it shrank the margin for refiners. So a rebound in prices due to a gradual easing of Corona curbs around the world and the curtailed output raises the prospect of higher fuel prices in the coming days for consumers in India, which imports over 80% of its oil needs.
Members of OPEC and their allies, including Russia and Mexico, had in April agreed to cut production by 9.7 million barrels a day, or roughly 10% of global supply daily, in May and June. Saudi Arabia and Russia have agreed to extend that deal till July and the grouping is scheduled to meet next week to ensure stricter adherence to cuts by other members and a future course of action.