High oil prices are hurting global economic recovery, says Puri

Oil Minister Hardeep Singh Puri said on Friday continued high international oil prices would hurt global economic recovery as he renewed his advocacy with Saudi Arabia and other OPEC producers so as not to keep production levels artificially lower.

He described India, alongside the United States, Japan and Korea, releasing oil stocks from their emergency stockpile as a “very bold” step.

Earlier this week, India agreed to release five million barrels of crude oil from its strategic reserves as part of coordinated international efforts to cool oil prices. The United States has announced the release of 50 million barrels.

But that didn’t change prices much, and rates fell to $ 77 a barrel on Friday amid fears that a new variant of the coronavirus would hurt demand.

“The release of strategic oil, whether symbolic or real, I don’t know, but it’s a very bold move,” Puri said at the Indian economic summit in Republic Television.

Read – What’s going on with gasoline prices in the United States?

India is the third largest consumer and importer of oil in the world and has been severely affected by the relentless rise in international oil prices. Retail gasoline and diesel prices hit record highs earlier this month before the government cut taxes, costing it Rs 60,000 crore this year.

Puri said the high prices would undermine the global economic recovery.

“We have told producing (nations) that if you are not careful, you will find yourself in a situation where your desire to maximize your short-term profits will undermine the global economic recovery. If that is compromised, then who are you selling the oil to, ”he said.

“I am very confident that this government has shown the way. We will do whatever it takes to protect consumers,” Puri said.

The government earlier this month cut excise duties on gasoline by Rs 5 per liter and on diesel by Rs 10 per liter. Most states have also reduced their VAT to provide additional relief to consumers.

Puri said oil prices are determined by Saudi Arabia, the United Arab Emirates and Russia under OPEC +. “They’ve kept their supplies below demand. They say it’s temporary for a month or two; after two months there will be more supply available than demand. That’s what they say. “

Regarding domestic fuel prices, Puri said the government wants to subject petroleum products to the GST to help reduce levies, but state governments are against it.

“They will never want to lose the alcohol and petroleum revenues and they are only using that as an argument against us,” he said.

India’s five million barrels of oil freed from strategic reserves are almost equivalent to its daily oil consumption of 4.8 million barrels. India built 1.33 million tonnes of storage at Visakhapatnam in Andhra Pradesh, 1.5 million tonnes at Mangaluru and 2.5 million tonnes at Padur (both in Karnataka).

The UAE’s ADNOC has leased half of Mangalore’s storage, while the rest is owned by state-owned MRPL. State-owned enterprises and the government have stored oil at the other facilities.

While the United States stocks 727 million barrels, Japan holds 175 million barrels of crude and petroleum products under the Strategic Petroleum Reserve (SPR).

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Steve R. Hansen