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India Has Taken Up High Oil Prices with OPEC, Demanding Affordable Rates, Govt Tells Parliament

Petrol and diesel prices have shot up to record highs across the country after relentless price increases since early May.

Petrol and diesel prices have shot up to record highs across the country after relentless price increases since early May.

India imports 85 per cent of its oil needs and rates benchmarked to international prices have fuelled inflation.

India has taken up the issue of high oil prices with producer nations and OPEC, demanding affordable rates, Minister of State for Petroleum and Natural Gas Rameswar Teli told the Lok Sabha on Monday. Petrol and diesel prices have shot up to record highs across the country after relentless price increases since early May. Petrol is retailing above Rs 100 a litre in more than a dozen states.

“The Government has been taking up the issue, bilaterally with crude oil-producing countries as well as with the Organization of Petroleum Exporting Countries (OPEC) for affordable crude prices for consuming countries like India," Teli said in a written reply to a question in the Lok Sabha. India imports 85 per cent of its oil needs and rates benchmarked to international prices have fuelled inflation.

“Minister for Petroleum and Natural Gas held meetings with Secretary-General of OPEC and also engaged with heads of other international energy fora to convey India’s serious concerns over crude oil price volatility, and India’s strong preference on responsible pricing by producers and reasonable pricing for consumer countries, which is mutually beneficial for consumers and producers," Teli said. The new oil minister Hardeep Singh Puri has in the last few days flagged the issue of high oil prices to Saudi Arabia, UAE and Qatar.

On Sunday, OPEC and its partners reached a deal to increase oil production by 400,000 barrels per day (bpd) each month for the rest of this year and into 2022. The pact ended two weeks of limbo for oil markets as OPEC+ leaders sought a solution to demands by the United Arab Emirates (UAE) to increase its production baseline in return for supporting an extension of the group’s cooperation agreement.

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Sunday’s agreement raises UAE as well as Saudi Arabia’s and Russia’s baseline. The agreement envisages continuing the monthly 400,000 bpd increments to around September 2022 “subject to market conditions", when members would theoretically reach baseline production.

“Had a warm and friendly discussion with His Royal Highness, Prince Abdulaziz bin Salman Al Saud, Minister of Energy of Saudi Arabia on strengthening bilateral energy partnership and developments in the global energy markets," Puri had said on July 15. Saudi Arabia, he had said, is a central player in the international energy market.

“I conveyed my desire to work with His Royal Highness Prince Abdulaziz to bring greater predictability and calm in the global oil markets, and also to see hydrocarbons become more affordable," he had said. Saudi Arabia is the world’s largest exporter of crude oil and India’s second-biggest source after Iraq.

The discussions focused “on strengthening bilateral energy partnership and developments in the global energy markets," he had said. “Highlighted the crucial role of Saudi Arabia in rapidly growing energy needs of India in the coming years, and my strong desire to work with His Royal Highness to further diversify our bilateral strategic energy partnership beyond buyer-seller to see greater two-way investments." Concerned over the rising oil prices, India has been reaching out to key oil producers in the Middle East.

The rebound in international oil prices from lows hit in May on the back of demand recovery has sent petrol and diesel rates to record highs in India. Petrol has crossed the Rs-100-a-litre mark in more than one-and-a-half dozen states and union territories, while diesel is being sold at over Rs 100 a litre in Rajasthan and Odisha.

“Prices of petrol and diesel have been made market-determined with effect from June 26, 2010, and October 19, 2014, respectively. Since then, the Public Sector Oil Marketing Companies (OMCs) take appropriate decision on pricing of petrol and diesel in line with international product prices and other market conditions," Teli told the Lok Sabha. The OMCs have not only increased but also decreased the prices of petrol and diesel in line with changes in international prices and rupee-dollar exchange rate, he said.

“Indian oil companies continue to procure crude oil through term contracts as well as spot market from different sources at a competitive price," he added.

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first published:July 19, 2021, 20:49 IST