Union Minister of Petroleum and Natural Gas and Steel Dharmendra Pradhan urged various oil-producing countries to ‘rethink’ on continuing and increasing production cuts. The Union Oil Minister made this appeal while he was participating in the 11th IEA-IEF-OPEC Symposium on Energy Outlooks —which was held virtually— on February 17 2021. The virtual event was held under the patronage of the Minister of Energy of Saudi Arabia HRH Prince Abdulaziz bin Salman Al Saud.
The symposium saw the participation of top inter-governmental energy agencies -IEF, IEA, OPEC, IRENA and the GECF. While, dignitaries like, H.E. Norma RocíoNahle García, Secretary of Energy, Mexico and H.E. Timipre Sylva, Minister of State of Petroleum Resources of Nigeria also participated in the event.
During his interaction with various agencies and oil-producing blocks, he reiterated that in the collective interests of both producing and consuming countries, prices should be reasonable and responsible. The fuel prices in India have been on a run and the latest revision saw Diesel prices breach Rs 80-mark in Delhi while Petrol, burning a hole in consumer pockets, now sells for Rs 100 per liter in states like Rajasthan.
Prime Minister Narendra Modi without naming Congress government, blamed the previous government for the price hike, saying their inability to cut import dependence has led to the spike in fuel prices which has seen a continuous escalation for the past 10 days.
The recently-released IEA’s India Energy Outlook 2021 highlights that India has now emerged as the key centre for global energy demand, and is expected to become world’s largest energy consumer in the near future. “Our share in global energy consumption is set to double in the next three decades,” Minister said.
OPEC and EIA in their near-term outlook estimate that global fuel consumption will grow by 5.6 to 6 million barrels per day in 2021, where more than half of this growth will be attributed to only two Asian countries–India and China. Natural gas demand is also projected to increase three-fold by 2040.
The oil consumption in India, will only begin to plateau in 2025 and will reach 6 million barrel (MBD) rising from 5 MBD in 2015, according to BP’s latest outlook estimates.
Given this backdrop, Pradhan outlined the need to allow consumption-led recovery that has just taken its place in emerging economies like India. The rising oil prices during the last few weeks are hurting the fragile global economic recovery leading to significant demand contraction. The key producing countries have not only revised the production cuts over and above the previously announced levels, but also made additional voluntary cuts, which has led to rapid rise in oil prices all around the world.
The price-sensitive Indian consumers are adversely affected by rising petroleum product prices, which stymies demand growth in the economy, potentially harming the delicate economic growth trajectory, which is showing signs of recovery, in India.