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The supply-side management of the oil market from OPEC+ in recent months could lead to demand destruction as fragile economies may not be able to bear with high oil prices much longer, Hardeep Singh Puri, the oil minister of the world’s third-largest crude oil importer, India, has told Argus in an interview.
It is the right of the OPEC+ producers to decide how much oil they would pump, but they should not be “unmindful of the consequences,” the minister said.
“And it can become a self-fulfilling prophecy, that the demand will drop because people don't have the capacity to sustain it,” Puri added.
The comments came just as Saudi Arabia and Russia, the key OPEC+ partners, said this week they would be keeping their oil supply cuts in November and December.
Hours before a regular OPEC+ panel meeting, Saudi Arabia said early on Wednesday it would continue cutting an extra 1 million barrels per day (bpd) from its crude oil production in November and December, and Russia said in a separate statement it would continue to reduce oil exports by 300,000 bpd until the end of the year. Both supply levels could be revised next month.
In comments posted on Twitter on Thursday, the Indian minister said that “Cumulatively, OPEC & OPEC+ have reduced the availability of oil by 4.96 mb/d, comprising 5% of global oil demand, from the market since 2022, spiking brent prices from $72/bbl in June to $97/bbl in September 2023.”
“These measures have unintended consequences,” he said.
“I think there is something called a reasonable level with which people can live,” Puri said.
This is not the first time that the Indian oil minister has called for “reasonable” oil prices.
Earlier this week, Puri urged OPEC “to imbue a sense of pragmatism, balance, and affordability in the oil markets” during a meeting with OPEC Secretary General Haitham Al Ghais on the sidelines of the ADIPEC energy conference in Abu Dhabi.
The minister “urged OPEC to recognize the gravity of the current economic situation and urged the Secretary General to use his office to imbue a sense of pragmatism, balance and affordability in the oil markets.”
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com