India, the world’s third-biggest crude importer, on Friday said the decision of the global oil cartel to continue with production cuts has emerged as a threat to the economic revival of oil importing as prices have already shot up by 33% this year with Brent crude crossing $67 per barrel.
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.
“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, urged producers to ease output cuts and help the global economic recovery from the coronavirus pandemic.
“We were really hopeful that OPEC and OPEC+ would have eased the production cuts to some degree taking into account the fragile recovery of the global economy, particularly in developing countries,” Minister for Petroleum and Natural Gas Dharmendra Pradhan said.
India imports about 84% of its oil and relies on Middle Eastern supplies for meeting over three-fifths of its demand.
The country is also heavily dependent on taxes on petroleum products to mobilise resources for development and providing for social welfare schemes to benefit the poor. This results in retail prices shooting up and household budgets coming under a strain.