Saudi Energy Minister Khalid Al-Falih has spoken with Indian Oil Minister Dharmendra Pradhan by phone and discussed the current oil market situation, an Oil Ministry statement said.
“Minister Al-Falih assured Minister Pradhan that supporting global economic growth is one of the Kingdom’s key goals,” the statement said. “He reiterated his commitment towards stable supplies and that the Kingdom together with other producers will ensure availability of adequate supplies to offset any potential shortfalls and ensure that prices remain reasonable.”
Crude oil prices touched $ 80 a barrel on Thursday for the first time since 2014. Prices are up 67 per cent since July 1 last year due to healthy demand and the cartel of key oil producers, including Saudi and Russia, cutting supplies. US sanctions against Iran, and drop in Venezuela’s production have accelerated the recent price surge, hurting India that imports nearly 83 per cent of the oil it consumes.
“Minister Pradhan expressed his concern about rising prices and its negative impact on consumers and the Indian economy. Minister Pradhan emphasised his desire for stable and moderate prices,” the statement said.
Saudi Arabia has been hawkish lately, targeting a price of $ 80 a barrel to support domestic spending and the valuation of state-owned Armaco ahead of its planned IPO, according to media reports. The oil cartel OPEC hasn’t yet signalled the need to ease production cuts despite global stocks having fallen to the targeted levels and an uproar among consumers over price jump.
The official statement hasn’t described what constitutes ‘reasonable’ price. The Indian government has been demanding ‘reasonable and responsible’ prices for at least three years but never gave a price band that would qualify for this.
With some lag, higher crude oil prices translate into increased fuel prices. In India, diesel is being sold at record prices while petrol is just about 55 paise short of its peak. In Delhi, petrol was priced at Rs 75.61 per litre and diesel at Rs 67.08 per litre on Friday at Indian Oil pumps. State oil companies are expected to further raise rates in line with international prices and to make up for the lost margins during price-freeze ahead of the just-concluded Karnataka elections.