India wants responsible, reasonable oil prices: Minister

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As international oil prices near USD 93 per barrel for the first time in 7 years, India on Monday said it strongly prefers responsible and reasonable pricing and has conveyed serious concerns over crude oil price volatility.

“There have been major fluctuations in international prices of crude oil and petroleum products in recent few months,” Minister of State for Petroleum and Natural Gas Rameswar Teli said in a written reply to a question in the Rajya Sabha.

India is 85 per cent dependent on imports to meet its oil needs and domestic petrol and diesel prices are linked to international oil rates. But for the last over three months, despite a spurt in international oil prices, petrol and diesel prices have not been changed ahead of elections in crucial states like Uttar Pradesh and Punjab.

“The Government has been taking up the issue, bilaterally with crude oil-producing countries with the Organization of Petroleum Exporting Countries (OPEC) and with heads of other international fora to convey India’s serious concerns over crude oil price volatility, and India’s strong preference for responsible and reasonable pricing for consumer countries,” Teli said.

To a separate question, Oil Minister Hardeep Singh Puri said the basket of crude oil India buys has risen by USD 18.09 per barrel from USD 71.32 as of December 1, 2021, to USD 89.41 as of January 31.

“There have been huge fluctuations in international prices of crude oil in recent few months due to various global events including lower than expected production restorations by OPEC nations, increase in demand as the world economy recovers from disruption caused due to Covid-19 and its variants, geo-political tensions, lower than usual inventory levels in major consuming nations, effects of reduced investments in crude oil production facilities over past few years, etc,” he said.

Puri said the retail selling prices of petrol and diesel are linked to their respective international product prices. The international prices of petrol considered in pricing in the country have risen from USD 79.55 per barrel on December 1, 2021, to USD 102.40 on January 31, 2022. The international prices of diesel considered in pricing in the country have risen from USD 78.48 per barrel to USD 104.62 in the same period.

To a separate question, Teli said prices of petrol and diesel are market-determined with effect from June 26, 2010, and October 19, 2014, respectively.

“Since then, the public sector oil marketing companies (OMCs) have been taking appropriate decision on pricing of petrol and diesel on the basis of international product prices and other market conditions,” he said.

The central government reduced the excise duty on petrol by Rs 5 per litre and diesel by Rs 10 from November 4, 2021. Following this, many states/UTs also reduced the VAT on petrol and diesel.

“The measure was aimed to give a further fillip to the economy and to boost consumption and keep inflation low, thus helping the poor and middle classes,” Teli said.

He said the World Oil Outlook 2021, the flagship publication by OPEC, has projected that the oil demand in India is expected to reach around 11 million barrels per day by 2045 as compared to approximately 4.9 million barrels per day in 2021.

“Government is taking various steps to provide for the country’s energy security including Tamil Nadu, through, inter alia, increasing domestic production of oil and gas in all states of India, diversifying import sources to new countries and regions; and diversifying energy sources beyond traditional hydrocarbons to emerging fuels like ethanol, compressed biogas, hydrogen etc,” he said.

“Also, Government has been taking up the issue, bilaterally with crude oil-producing countries, with OPEC and with heads of other international fora to convey India’s serious concerns over crude oil price volatility, and India’s strong preference for responsible and reasonable pricing for consumer countries,” he added.