With Saudi energy minister Abdulaziz bin Salman, OPEC secretary-general Mohammad Sansui Barkindo and world energy leaders listening, oil minister Hardeep Singh Puri told the SERAWeek India Energy Forum that the world needs “clean, affordable, reliable (and) sustainable” energy to speed up the post pandemic recovery.
“I hope our friends in OPEC+ (the grouping including other major producers such as Russia) will factor in the sentiment that is being echoed. While we are trying to ensure that economic activity accelerates, the fact is that high prices undermine it. If economic activity slows down, then demand for oil and gas will also (decline),” Puri said.
Reminding the global energy leaders how oil prices had crashed to $19 in April 2020 when the pandemic shut down major global economies, Puri said the current situation was a “wake-up call”, indirectly telling producers they too will suffer if economic recovery stumbled due to high oil and gas prices.
The inflationary impact of high oil prices on India, seen to lead global oil demand for the next two decades as the fastest-growing major economy, has the potential to scar producers too.
“Crude oil accounts for nearly 20% of our import bill. Our fuel import bill has jumped from $8.8 billion (in quarter ending June 2020) to $24 billion in quarter ending June 2021…The impact of these rise in prices on all economies, but particularly on large developing countries like India, you could see a surge in inflation which could also increase the cost of producing and transporting goods,” he said hinting that such a situation would throttle demand.
India’s raised pitch came on the back of Japan prime minister Fumio Kishida on Monday saying the recent increase in oil prices should encourage producers raise output, which is expected to stabilise the market.
But Saudi energy minister bin Salman defended OPEC+ management of the oil market, saying the grouping had “extremely limited” role in pricing. “The issue is not the availability of crude oil. Even if we made it available in tons and tons, who’s going to burn it? Who is in need of it? And are they in need of crude or in need, for example, of gas?”
In an expert session, petroleum secretary Tarun Kapur said high prices of oil and gas, which India sees as the transition fuel, could force the country to fall back on “what is available with us”, indirectly hinting at increased use of coal.