India's Petroleum Minister Dharmendra Pradhan has warned that higher oil prices could interfere with global economic recovery in the latest signal from New Delhi-one of the world's biggest drivers of oil demand growth-is unhappy with where prices are going.
"Efforts at artificially distorting prices will have a dampening effect on the fragile global economic recovery that is underway," Pradhan said, as quoted by Reuters, at the S&P Global Platts South Asia Commodities Forum.
This is not the first time India has spoken against price-control measures this year. In January, Pradhan slammed OPEC directly, saying its decision to keep cutting production had created confusion, noting Saudi Arabia's decision to unilaterally cut 1 million bpd from its output on top of its OPEC quota. At the same time, the Kingdom has hiked prices for Asian exports of crude, which additionally angered New Delhi.
India relies on imports for more than 80 percent of its oil consumption. Like most other economies across the globe, Asia's third-largest economy suffered a fallout from the pandemic, making it particularly vulnerable to oil price changes that benefit exporters. Its oil demand declined last year for the first time in two decades as a result of the pandemic. However, demand has been on the mend since the second half of last year, driven by higher fuel demand.
"While we do not favour too low prices, we also do not support high prices, which deny energy access to millions in India," Pradhan said at the S&P Global Platts event.
"If the world has to grow as a whole, there has to be a mutually supportive relationship between producers and consumers. It is in the interests of producers that oil-dependent economies keep growing steadily," he added.
India is trying to boost its domestic production of oil and gas, too. The country has planned investments of $143 billion to that end, as well as to increase domestic refining capacity by as much as 80 percent.
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
Comments
The claim by India’s Petroleum Minister Dharmendra Pradhan that higher oil prices could interfere with global economic recovery is indefensible. Contrary to his claim, high oil prices invigorate the global economy by stimulating the three biggest chunks that make the global economy, namely, global investments, the economies of the oil-producing countries and the global oil industry.
Furthermore, if India depends on crude oil imports for more than 80% of its oil needs, the Arab Gulf producers which provide the bulk of India’s oil imports, are dependent on the oil export revenue to the tune of 85%-90%.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London