Oil producers' decision to cut production may hurt some economies
India, the world's third-largest oil importer, on Friday asked major producers to continue cutting production as consumption in some countries may decline due to price increases.
The Organization of Petroleum Exporting Countries (OPEC) and its partners, a group called OPEC +, agreed in Thursday not to increase supply in April as they over-recover demand in the midst of the COVID-19 pandemic. Looking forward to Crude oil prices rose after the announcement and have risen 33% this year.
Brent crude futures for May rose to $ 67.44 a barrel on Friday, and are on track for a 2% gain this week.
The Minister of Petroleum and Natural Gas said that as the countries consuming the most crude oil, India is concerned that such actions by producer countries have the potential to affect consumption-led recovery and more hurting consumers . Dharmendra Pradhan told Reuters.
India fought hard due to rising oil prices, urging producers to ease output cuts and help the global economic recovery from the epidemic.
“We were really hopeful that OPEC and OPEC + have cut production somewhat, keeping in mind the fragile recovery of the global economy, especially in developing countries,” Mr Pradhan said. Rising oil prices pose fiscal challenges for India, where heavy retail fuel prices have touched record highs, threatening demand-driven recovery.
India imports around 84% of its oil and relies on West Asian supplies to meet three-fifths of its demand.
‘Use oil bought cheaply'
Responding to India's repeated request for an increase in production, Saudi Energy Minister Prince Abdulaziz bin Salman on Thursday responded that India should start using cheaply purchased oil during the price drop last year.
“We will continue to work with each other … Avoiding instability will help both producers and consumers,” the Saudi minister said.