India considers non-opep options to bring oil prices under control
Unreasonable production restrictions imposed by the cartel of oil producers, the Organization of the Petroleum Exporting Countries (OPEC), forced India to negotiate long-term alternative supplies outside the group, such as the United States and Russia, as gasoline and diesel prices soar in the country, two officials familiar with the matter said.
India is the world’s third largest importer of crude oil after the United States and China. Therefore, oil producers cannot ignore India for long without losing market share to other competing countries, the officials said on condition of anonymity.
“It is interesting that even Russia (which is an outside OPEC ally in recent cartel production cuts) is in contact with us for long-term crude supply contracts on concessional terms. We are actively reviewing the proposal, ”said one of the officials, a key policy maker on the matter. He declined to disclose business details, however.
Some other OPEC members, including an African, are also ready to enter into long-term contracts, he said.
India is witnessing a surge in auto fuel rates due to rising international oil prices. Gasoline on Sundays has become more expensive in ₹6.82 per liter and diesel per ₹7.24 per liter as their prices at the pump jumped for the 27th time in 48 days.
One of the main reasons for the high rates of domestic fuel is the reduction in production by the oil cartel, a second official said.
OPEC and its allies, including Russia (together known as Opec +), announced on April 12 last year an unprecedented 9.7 million barrels per day reduction in oil production, one-tenth of global production, as of May 1, 2020, but have not adhered to the planned restoration of supply.
The reduction in production was initiated when international oil rates fell below $ 20 a barrel in April of last year. Benchmark Brent crude on April 21, 2020 fell to $ 19.33 per barrel. However, it rose to over $ 50 per barrel at the start of 2021. With growing demand and supply constraints, oil prices now hit $ 74.39 per barrel on Wednesday June 16, 2021, the highest since April 2019.
“Producers should not take consumers for granted. At the time of their crisis, we had supported them. Now it’s their turn. If they do not weaken, we will be forced to reduce our imports from OPEC countries and seek other opportunities such as cash purchases and non-OPEC producers ”, declared the first responsible.
Non-OPEC suppliers produce around 60% of global production, while Saudi Arabia-led OPEC produces around 40% of global crude oil.