NEW DELHI (Reuters) - India, the world’s third-biggest oil importer and consumer, on Friday said the decision by major producers to extend output cuts as prices move higher could threaten the consumption led-recovery in some countries.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, agreed on Thursday not to increase supply in April as they await a more substantial recovery in demand amid the coronavirus pandemic.
Oil prices jumped more than 2% on Friday, hitting their highest in nearly 14 months in reaction to the decision.
“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,” Minister for Petroleum and Natural Gas Dharmendra Pradhan told Reuters.
India, hit hard by the soaring oil prices, has urged producers to ease output cuts and help the global economic recovery.
“The decision by OPEC+ has saddened us. It is not good news for India, China, Japan, Korea and other consuming nations,” Pradhan said.
Rising oil prices are posing fiscal challenges for India, where heavily-taxed retail fuel prices have touched record highs in some parts of the country, threatening the demand-driven recovery.
India, Asia’s third-largest economy, imports about 84% of its oil and relies on Middle Eastern supplies for meeting over three-fifths of its demand.
“We still appeal to the oil producers for an alternative to be found. Pushing us (consuming nations) is not in the interest of both sides. High oil prices could benefit a group of producing nations, but if you push customers that could lead us to find alternatives,” Pradhan added.
Responding to India’s repeated call to ease the output cuts, Saudi Energy Minister Prince Abdulaziz bin Salman responded on Thursday by saying India should start using oil it bought cheaply during the price collapse last year.
However, the Saudi minister added, “we will continue to work with each other... we share their (India’s) view that avoidance of volatility (in prices) will help both producers and consumers.”
Reporting by Nidhi Verma; Editing by Clarence Fernandez, Christian Schmollinger and Marianna Parraga;Editing by Elaine Hardcastle
Our Standards: The Thomson Reuters Trust Principles.