Responding to the recent jump in gasoline and gasoil rates moving in tandem with soaring crude futures, India has urged Organization of the Petroleum Exporting Countries (OPEC) and allied oil producers to relax the production cuts.
Crude Oil has been running bullish since the past few weeks due to production cuts by OPEC+ and hopes of a demand recovery due to roll out of COVID-19 vaccines. Benchmark Brent crude rallied to almost 13-month high at around USD 64 per barrel this week, raising fears among Indian importers regarding demand contraction if production cuts continue to push up the curve.
India's gasoline demand, which had reached pre-COVID levels in August, slipped again in the first two weeks of February in response to an abrupt rise in retail prices which have touched record highs tracing the global trend. As per the Indian oil minister Dharmendra Pradhan, rising price of petroleum products is indicative of inflation in India, Asia's third largest economy and the third biggest consumer and importer of oil in the world. The personnel also mentioned in one of the interviews that, "I am appealing for easing of production cuts by the key oil exporting countries".
The Indian market, which meets over 84% of its oil demand through imports, is highly sensitive to global oil price fluctuations and hence the upsurge could potentially hinder economic growth when the world is still in recovery phase of the pandemic induced slowdown. As per ChemAnalyst pricing data, the recent spurt in crude oil has also triggered significant increases in the prices of downstream petrochemicals like Styrene Monomer (SM), Benzene and Methanol in India and China.
In addition, OPEC+ is likely to meet on March 4 for a policy-setting meeting and ahead of the meet, India is keenly observing if the world’s largest exporter, Saudi Arabia eases the voluntary cut of 1 million barrels per day (bpd) which had delayed plans to increase its output in January to match lesser than anticipated fuel demand due to continued restrictions on travel because of the pandemic. The country has made additional voluntary throughput cuts also for February and March.