 "Hardeep Singh Puri")
Petroleum and Natural Gas Minister Hardeep Singh Puri on Wednesday warned of “organised chaos” if crude oil starts selling at over $100 per barrel. Saudi Arabia and Russia announced they will continue existing production cuts till the end of the year hours after Puri made the comments at the ongoing ADIPEC oil and gas conference in Abu Dhabi.
“If the price goes above $100, it's not going to be in the interest of either the producing country or anyone’s interest. You will have large, organised chaos,” Puri told news channel CNN at a discussion panel early on Wednesday. He pointed out that rising prices in the last 18 months had pushed 100 million people in many parts of the developing world into abject poverty.
A day before, Puri had said oil producers need to show the same sensitivity towards consuming countries as they themselves had been shown during the pandemic,
after a meeting with OPEC Secretary General Haitham Al-Ghais. India imports about 60 per cent of its crude oil worth $101 billion & and other petroleum products from OPEC members.
“During the pandemic, when crude oil prices crashed, the world came together to stabilise the prices to make it sustainable for the producers,” Puri had pointed out.
International oil prices had dropped to $20 per barrel during the outbreak of the pandemic, remaining below $50 per barrel for the rest of 2020. It hovered at the $60-$70 per barrel range in 2021. Prices had subsequently shot up in February 2022, as Russia began its “special military operation” in Ukraine, reaching historic highs in May, 2022.
Puri said that crude oil prices at around $80 per barrel would be a convenient price range for countries. “It is in the interest of all the countries, including oil producing and consuming, to have a healthy discussion on what constitutes a reasonable price band,” he added.
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India is the world’s third largest consumer of oil and LPG and 4th largest LNG importer.
Production cuts to continue
On Wednesday, the Saudi Energy Ministry said the kingdom would continue to produce 9 million bpd in November and December. This would be 25 per cent lower than its maximum capacity of 12 million in bpd.
On the same day, Russia said it will consider next month whether to deepen its voluntary oil production cuts or increase output, while separately continuing its current export cuts until the end of the year. In August, Moscow announced its production had marginally declined to 527 million metric tons (10.54 million barrels per day) in 2023, down from 535 million in 2022.
The latest announcement is widely expected to further push up oil prices, which have traded at above $90 per barrel since early-September. Brent crude prices, considered the global benchmark, stood at $89.2 on Wednesday at the time of writing this report.
Saudi Arabia is currently implementing production cuts of 1 million barrels per day (bpd) while Russia has instituted a voluntary export cut of 300,000 bpd. Production cuts first announced by both nations back in July had driven up prices at the pump, enriched Moscow's war chest, and complicated global efforts to bring down inflation.
