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India's state-owned and private refiners are set to collaborate on their crude oil imports to secure better contract terms, Reuters has reported, noting that the idea comes from the government.
"The companies can form joint strategies and they can even go for joint negotiations wherever possible," India's oil secretary Tarun Kapoor told Reuters.
India is one of the most import-reliant countries in the world, sourcing more than 8 percent of the oil it consumes from foreign producers. Because of this, it has been among the hardest hit by the oil price rally, with its oil bill swelling considerably while it still battles the fallout from the pandemic.
Last month, according to Reuters, India's trade deficit surged to a high of $22.6 billion, a figure last seen at least 14 years ago.
To cope with the energy shortage that has been instrumental in the latest oil price rise, India's government also plans to talk to OPEC about possible steps that can be taken to rein prices in. Indian media report that New Delhi will talk to OPEC secretary-general Mohammed Barkindo about the oil price situation during his upcoming visit to the country. The talks would also discuss finding a balance between the needs of suppliers and consumers.
India's oil bill for the first five months of its financial year, which started in April, was more than 138 percent higher than the bill for the respective period of 2020. While 2020 was the year of oil demand destruction, the increase is substantial, bringing the total for April to August to $42 billion. That compared with a bill of $18 billion a year earlier when oil was dirt cheap.
"OPEC+ should realise that this is not the right approach, they must step up production. If the demand is going up and you are not increasing production, you are trying to create a gap," secretary Kapoor said, as quoted by Reuters.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com