NEW DELHI: At a time when fears of a possible supply shortage due to the impending US sanctions on Iran have driven crude oil prices past four-year highs, India’s oil minister Dharmendra Pradhan said that it is not actual supply shortages, but “sentiments” that are pushing up prices.
“There is no issue of availability of crude oil today. But due to geopolitical uncertainty in different parts of the world, there is a sentimental issue. That is the primary challenge,” Pradhan said on the sidelines of the India Energy Forum by CERAWeek.
Sanctions on Iran by the US will come into effect in next few weeks and this has created a negative sentiment among nations who buy oil from that country. The “sentiment”, along with falling currency value, continues to push retail fuel prices in India to new highs on the daily revision chart. However, India, a major buyer of Iranian oil, made clear that post the sanction, they will face no shortage of supply and will continue their purchase from the gulf nation.
Pradhan said that Organisation of Petroleum Exporting Countries (OPEC) in June had promised there will be an additional production of one million barrels per day after their decision of capping. “Even though production in some member countries at present is lagging behind, I don’t think that will be the issue,” the minister said.
Pradhan added that he has already made clear the country’s position on importing oil from Iran and that there is nothing new to announce.Last week, the minister had said two state-owned oil refiners have booked import of 1.25 million tonne of crude from Iran in November.
Oil prices hit a four-year high of $86.74 a barrel earlier this month, as the market grapples with the expected loss of Iranian exports due to the US sanctions. Rates have cooled to around $81 in the hope that the US may extend the deadline for imposing sanctions by a couple of months. However, on Tuesday, diesel prices in domestic market touched a fresh high of Rs 82.83 per litre in New Delhi.