The world’s third-largest oil importer, India, is concerned that Thursday’s OPEC+ decision not to lift oil production in April could hurt the consumption-led recovery in oil demand, Indian Petroleum Minister Dharmendra Pradhan told Reuters on Friday.
“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,” Pradhan told Reuters.
On Thursday, the OPEC+ group surprised the market by deciding not to lift collective crude oil production from April, leaving only small exemptions to Russia and Kazakhstan, as it did in its January meeting.
So from April, not only will the alliance, for the most part, keep production unchanged – with the exception of Russia boosting output by 130,000 bpd and Kazakhstan by 20,000 bpd – but Saudi Arabia will also keep its extra 1-million-bpd cut into April, further tightening the market.
The surprise move from OPEC+ on Thursday sent oil prices soaring by 5 percent, with Brent approaching $68 and WTI Crude well above $64 a barrel.
India, which depends on imports for around 80 percent of its oil consumption, has been restless about the higher oil prices in recent weeks, which push up its oil import bill and domestic inflation.
Earlier this week, India called on the OPEC+ group again to boost production, saying that it does not support “artificial cuts to keep the price going up.”
As oil prices rallied to hit their highest level in 13 months, India started to call on OPEC+ as early as January to consider the effects of higher oil prices on consumption in recovering economies.
During last year’s oil price plunge, India topped its strategic petroleum reserves with oil at $19 a barrel, saving nearly US$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 bill and consumers and could undermine the recovery of one of the world’s most important markets driving oil demand.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Is This The World’s Next Big Offshore Oil Region?
- Oil Soars As OPEC+ Sources Suggest No Production Increase
- Will Private Shale Firms Crush The OPEC Oil Rally?