The Union government is holding parleys with state-run energy firms and private refiners to synergise imports of crude worth over $100 billion annually so that they can collectively bargain better prices from global oil producers at a time when auto fuel rates have soared over ₹100 per litre in several Indian cities.
Although refiners are free to source crude oil from across the globe, the government is making efforts to have a common mechanism for collective bargaining that would reduce the average cost of crude imports and benefit all stakeholders, petroleum secretary Tarun Kapoor said.
“We have already held couple of meetings with petroleum companies, both in public and private sectors,” Kapoor said, adding that this was a work in progress. Currently, refiners have individual crude sourcing strategy.
The initiative is significant in the light of northward rise in petrol and diesel rates since May 4. India is world’s third largest crude oil importer after the US and China, and purchases more than 80% of the crude oil it processes. It imported 227 million metric tonnes (MMT) of crude worth $101.4 billion in 2019-20, the year preceding the Covid-19 pandemic. Imports, however, fell to 198.1 MMT in 2020-21 because of the pandemic.
Kapoor said the oil producers’ cartel has been artificially raising international oil prices by resorting to output cuts, which is against long term interests of oil producers. Benchmark Brent crude, which fell to $19.33 a barrel on April 21, 2020, gradually rose to over $50 per barrel in early 2021 mainly because of supply squeeze by the Organisation of the Petroleum Exporting Countries and its allies, including Russia (together known as OPEC+). With rising demand and supply constraints, oil prices hit $74.39 a barrel on Wednesday (June 16, 2020), the highest since April 2019. That day WTI (West Texas Intermediate) settled at $72.15 a barrel, the highest since October 2018.
{{/usCountry}}Kapoor said the oil producers’ cartel has been artificially raising international oil prices by resorting to output cuts, which is against long term interests of oil producers. Benchmark Brent crude, which fell to $19.33 a barrel on April 21, 2020, gradually rose to over $50 per barrel in early 2021 mainly because of supply squeeze by the Organisation of the Petroleum Exporting Countries and its allies, including Russia (together known as OPEC+). With rising demand and supply constraints, oil prices hit $74.39 a barrel on Wednesday (June 16, 2020), the highest since April 2019. That day WTI (West Texas Intermediate) settled at $72.15 a barrel, the highest since October 2018.
{{/usCountry}}India has been vocal about the unfair trade practice by OPEC. Speaking at an OPEC Symposium this year, petroleum minister Dharmendra Pradhan said that India supported oil producers’ decisions to cut output to check free fall of oil prices in April last year, but when the demand has normalised, the supply should be restored.