Hardeep Puri urges OPEC to infuse sense of affordability in oil markets

Minister of Petroleum and Natural Gas Hardeep Singh Puri met the Secretary-General of the Organization of the Petroleum Exporting Countries (OPEC) on Tuesday and addressed the OPEC crude production cuts and their impact on the global energy sector.

"Minister of Petroleum and Natural Gas Hardeep Singh Puri urged OPEC to recognize the gravity of the current economic situation and urged the Secretary-General to use his office to imbue a sense of pragmatism, balance and affordability in the oil markets," stated the Ministry of Petroleum and Natural Gas release.

On the sidelines of the annual Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2023, on 3rd October 2023, Minister of Petroleum and Natural Gas and Housing, Hardeep Singh Puri had a bilateral discussion with Secretary General, OPEC, Haitham Al-Ghais.

"In the interest of global good, the Minister advocated balancing global energy markets by ensuring that crude oil prices do not outstrip the paying ability of the consuming countries," added the release.

Cumulatively, OPEC and OPEC+ have reduced the availability of oil by 4.96 mb/d (~5 per cent of global oil demand) from the market since 2022, spiking brent prices from approx USD 72 per barrel in June to approx USD 97 per barrel in September 2023.

During the discussions, the Minister highlighted, that due to the production cuts carried out by OPEC (10) and OPEC+ countries from August 2022 onwards, effectively around 5 per cent of the total global oil availability has been removed from the market, causing crude oil price to rise 34 per cent in just last 3 months.

"These cuts have been made despite growing energy demand. Brent Crude oil prices jumped from USD 72 per barrel in June to USD 97 per barrel in September 2023, placing severe strains on the capacities of most oil importing consuming countries," read the release.

Minister highlighted that in the background of the geopolitical crisis of 2022, which has added to existing inflationary pressures and created a real risk of recession in large parts of the world.

Minister further noted that while the Government of India, through positive intervention had effectively cushioned its economy from spiraling energy prices, the World needs to be cognizant that around 100 million people have been pushed away from cleaner fuels, back to coal and firewood in the last 18 months.

Minister wondered whether the global economy is again going to witness a situation similar to the economic turmoil of 2008 which had become a self-fulfilling prophecy. Brent prices had initially soared from USD 93.60 per barrel in January 2008 to USD 134.3 per barrel in July 2008, fueling an accelerated global economic meltdown, leading eventually to demand destruction and very low oil prices.