NEW DELHI: India on Thursday asked Opec to remove pricing anomalies for different regions with a view to helping the Corona-battered global oil industry back on its feet, leveraging its emergence as a key driver of demand recovery in recent times.
“It is essential for India and Opec to take a deep look at the rapidly changing global energy landscape, particularly in oil and gas sector, and revisit the ongoing exchanges so that we can jointly address the energy challenges during the ongoing and in the post-Covid scenario,” oil minister Dharmendra Pradhan told the India-Opec energy dialogue.
Pradhan’s remarks were a reminder of the brutal demand destruction and supply chain disruptions caused by the Coronavirus pandemic. As economies began shutting down in through the April-May period, oil demand tanked by 50%, prices sank below zero briefly before barely recovering to $20-plus per barrel level and remained stuck there for months. While crude has recovered to the $40/barrel-mark, prices remain under pressure due to the tepid pace of demand recovery – forcing companies to pull back investments and casting a shadow over projects.
Pradhan said Opec Secretariat needs to “increase its advocacy among its member countries to address the anomalies prevalent in the crude price differential declared by them for different geographical regions.” OPEC meets 78% of India’s oil demand, 59% of LPG needs and nearly 38% of LNG imports. India imported $92.8 billion worth of hydrocarbons from Opec member countries in 2019-20.
“There is a need to assess the impact of Covid-induced disruptions to the global energy sector supply chains and calibrate our approach towards the revival of energy sector… We are already seeing the signs of a second spell of lockdowns in several countries in Europe, and their immediate impact on crude prices,” he said.
This was a clear hint that it’s time for the West Asian oil producers to end their practice of offering deeper discounts to European consumers when it was Asian buyers such as India and China that were driving the demand growth. The International Energy Agency’s World Oil Outlook 2020 said India will lead the global recovery in energy demand. The country’s diesel, petrol and LPG demand surpassed the pre-Covid levels in October and is expected to rise further in the coming months.