Ahead of a critical OPEC meeting on July 1, India’s Petroleum and Natural Gas Minister Dharmendra Pradhan said he is persuading oil exporting countries to moderate surging oil prices and warned that high prices would push the country to tap alternative petroleum import sources such as Iran.
Stressing that inflation was a major challenge for the economy, Mr. Pradhan said that India had already exhausted strategic petroleum reserves it had built up last year by taking advantage of lower oil prices, over the last few months.
“India is a very price-sensitive market. With utmost politeness, I have got my own spending behaviour. If somebody’s planning our Budget is 80$(a barrel)-driven, then I am sorry. My affordability is the primary thing for me,” the Minister said at the BloombergNEF Summit.
He also indicated that India would opt for whichever option provided competitive prices within its ‘global diplomatic framework’, including Iran if the economic sanctions imposed on it by the U.S. were lifted.
The Organization of Petroleum Exporting Countries and its allies (OPEC+) are expected to discuss a possible easing of supply cuts, amid a rebound in global demand, on July 1.
With retail prices for petrol crossing ₹100 per litre in several parts of the country, the Minister conceded that ‘today’s price is very challenging’. “I am persuading my friends in OPEC which is supposed to meet in the next few days. I hope the price will be a little bit sober. That’s our expectation,” he said.
The Minister exuded confidence that the demand for petroleum products would return to pre-pandemic levels by the end of 2021.
“In a country and market like India, with the potential to influence the entire supply chain in the globe… Last time, the demand was destroyed in a big way, but by September-October, we came back to a near-normalcy situation. Again, in the second wave of COVID in India, around April, May we saw a demand disruption this year,” he said.
“But over the last three weeks of June, there is again a sign of demand resurgence due to lifting of lockdowns and gradual economic movement picking up. If I compare from the April-May period, this is a very good recovery. Yes, there are still challenges such as inflation, but I am confident by the end of this calendar year, we will be in a robust position to restore our conventional behaviour,” said Mr. Pradhan.