Oil prices in India rose after OPEC and its allies callously ignored India’s plea to ease production control, with Saudi Arabia uncharacteristically asking New Delhi to instead use oil it bought at rock bottom rates last year around April-May.
Dharmendra Pradhan, India’s Oil Minister, had in the Thursday’s OPEC meeting urged the producers’ group to ease production curbs to fulfill their promise of stable oil prices guaranteed in the beginning of the FY 2021. He maintained that unjust international oil prices were hurting economic recovery and demand.
Responding to a question on India’s pleas, Saudi energy minister Prince Abdulaziz bin Salman at a press conference undiplomatically stated that New Delhi should take some of the crude out of storage that they had purchased “very cheaply last year.”
“With regard to India, very simple. I would ask my friend that he withdraw some of the cheap oil that they bought in April, May and June (last year)”, the Saudi Minister said. “There is an opportunity cost for not withdrawing it now.” India had reportedly made a purchase of $16.71 million barrels of crude oil in April-May last year and had filled all the three Strategic Petroleum Reserves located at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka.
Crude prices rose to $68 a barrel on Friday. India had in April-March bought oil from Saudi Arabia and other producers at $18 per barrel to fill its strategic reserves amidst dented demand. Since then, it has been noted that the oil prices have made a high jump of nearly 70% since October, which had prompted India to criticize producers’ extended supply cut.
Earlier this week, Pradhan had requested OPEC that the economy is still at the stage of nascent recovery, where fuel demand is recovering to pre-pandemic levels. Thus India would want reasonable and responsible oil prices to continue on its growth trajectory.
Ironically enough, India, the world’s third-largest oil importer and consumer, had supported the decision of OPEC to cut production last year in view of the plummeting oil demand due to the spread of Covid-19, as the prices had fallen to negative.
But India ought not be blamed for its benevolent act of support, as Pradhan quite rightly states that “At that point in time, the producers especially OPEC assured the global market, that by the beginning of the 2021 demand will be coming back and production will be as usual. But I am sorry to say the production is yet to be normal.”
Thus it can quite rightly be stated that India has been the victim of OPEC’s unfulfilled, hollow promises of sustenance and cooperation, coupled with ungrateful tone of diplomacy and rhetoric that Arabia’s authorities now immensely indulge in.