NEW DELHI: India on Friday said that the country expected further relaxation in oil output cuts, a day after the Organization of the Petroleum Exporting Countries Russia, and their allies, a group known as OPEC+, agreed to ease its production cuts from May. In fact, the government has asked refiners to negotiate with oil producers to get better deals and review contracts they enter into for buying crude oil from Saudi Arabia.
“India has been appealing to OPEC and OPEC plus countries to ease crude oil production cuts that were announced last year. We believe crude supply should be market-determined rather than artificially managed,” said the Ministry of External Affairs spokesperson Arindam Bagchi. He further said that OPEC and OPEC+ countries have announced slight easing off last week but “we expect more”. India’s fuel import bill has rocketed, and fuel prices inflated by government taxes imposed in 2020 have hit records. 2021). Taxes now make up around 59 per cent of the retail price of petrol 54 per cent of diesel rates.
Bagchi also sees soaring prices as a threat to India’s recovering economy. “High price of crude oil reduced the consumption-related recovery of several countries which also includes India.” he added. The price of Brent Crude has increased by 6.5 per cent during March 2021 as against the price prevailing during February 2021 and has also rose sharply by 95 per cent as against the price prevailing during the same month in the previous financial year.
India imports 85 per cent of its oil needs and is often vulnerable to global supply and price shocks.When oil prices started to rise in February, India wanted Saudi Arabia to relax output controls but the Kindgom ignored its calls. This has led to the government now pressing for diversification of the supply base.
“Traditionally, Saudi Arabia and other OPEC producers have been our mainstay suppliers of crude oil. But their terms have often been loaded against the buyer,” an official told PTI. Refiners may look to reduce the quantity they buy through term contracts and instead buy more from the spot or current market to take advantage of fall in prices on any day.