The world’s third largest oil importer, India, is concerned that Thursday’s OPEC + decision not to increase oil production in April could hamper the recovery in consumption-led oil demand, said the country’s minister of oil. Oil, Dharmendra Pradhan, told Reuters on Friday.
“As one of the largest oil-consuming countries, India is concerned that such actions by producing countries have the potential to undermine consumption-led recovery and further harm consumers, especially in our price-sensitive market,” said Pradhan to Reuters.
On Thursday, the OPEC + group surprised the market by deciding not to raise collective crude oil production from April, leaving only small exemptions for Russia and Kazakhstan, as it did at its January meeting.
Therefore, starting in April, not only will the alliance, for the most part, keep production unchanged – with the exception of Russia which increased production by 130,000 bpd and Kazakhstan by 20,000 bpd – but Saudi Arabia will also maintain its extra cut of 1 million bpd in April, further tightening the market.
The surprise move by OPEC + on Thursday caused oil prices to jump 5 percent, with Brent approaching $ 68 and WTI Crude well above $ 64 a barrel.
India, which depends on imports for about 80% of its oil consumption, has been uneasy about higher oil prices in recent weeks, which has raised its oil import bill and domestic inflation.
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Earlier this week, India asked the OPEC + group again to increase production, saying it does not support “artificial cuts to keep the price going up”.
As oil prices rebounded to reach their highest level in 13 months, India began turning to OPEC + as early as January to consider the effects of rising oil prices on consumption in recovering economies.
During the fall in oil prices last year, India exceeded its strategic oil reserves by $ 19 a barrel, saving nearly $ 700 million in the process, India’s Ministry of Petroleum and Natural Gas said in September 2020.
Oil above $ 60 is certainly painful for India’s import account and consumers and could hurt the recovery of one of the most important markets in the world, boosting demand for oil.
By Tsvetana Paraskova for Oilprice.com
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