India complains about high oil prices to Saudi Arabia

Cornelia Mascio
Mag 18, 2018

While Pradhan expressed concern about rising prices and its negative impact on consumers and the Indian economy, the Saudi minister was trying to ease India's concerns over the oil price spike.

It has taken 500 days and the sacrifice of nearly a billion barrels in lost oil output for the global crude market to eradicate a deep supply surplus, but oil prices have now hit OPEC heavyweight Saudi Arabia's desired level of $80 a barrel.

Saudi Energy Minister Khalid al-Falih said he made a telephone call to his Indian counterpart, Dharmendra Pradhan, to discuss the situation in the global oil market. "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", the statement added.

Brent rose to United States dollars 80 a barrel - the highest level since 2014 - on concerns that the USA sanctions on Iran will further strain supply conditions, even though the European Union is unlikely to follow the U.S. in re-imposing the sanctions, suggests the research team at Rabobank.

"Minister al-Falih assured Minister Pradhan that supporting global economic growth is one of the kingdom's key goals", a statement from the official Saudi Press Agency read.

The Asian giant is the third-largest oil consumer on the globe, behind only the USA and China.

Pradhan expressed his concern about rising prices and its negative impact on consumers and the Indian economy.

While a combined reduction in oil production by Opec and Russian Federation since January 2017 has helped reduce excess global stocks and revive prices, it is unlikely to further reduce supplies as consuming nations have voiced concerns the price rally might have gone too far and could lead to demand destruction. Crude oil prices are up almost 20 percent for Brent, the global benchmark, and up 5 percent since last week, when U.S. President Donald Trump pulled out of the Iranian nuclear agreement.

While the Indian government is putting on a courageous front, it has ruled out any to reduction in duties and levies because of the comfortable fiscal situation and the temporary nature of the oil price hike.

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