Minister of Petroleum & Natural Gas met Secretary General – OPEC, addressed the OPEC crude production cuts and its impact on global energy sector.
Cumulatively, OPEC and OPEC+ have reduced the availability of oil by 4.96 mb/d (~5% of global oil demand) from the market since 2022, spiking brent prices from ~$72/bbl in June to ~$97/bbl in September 2023.
On the sidelines of the annual Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2023,on 3rd October 2023, Minister of Petroleum and Natural Gas and Housing, Shri Hardeep Singh Puri had bilateral discussion with Secretary General-OPEC, H.E. Mr. Haitham Al-Ghais.
During the discussions, the Minister highlighted, that due to the production cuts carried out by OPEC (10) and OPEC+ countries from August 2022 onwards, effectively around~5% of the total global oil availability has been removed from the market, causing crude oil price to rise ~ 34% in just last 3 months.
These cuts have been made despite growing energy demand. Brent Crude oil prices jumped from $ ~72 /bbl in June to $ ~97/bbl in September 2023, placing severe strains on the capacities of most oil importing consuming countries.
Minister highlighted that in the background of geopolitical crisis of 2022, which has added to existing inflationary pressures and created a real risk of recession in large parts of the world.
Minister further noted that while Government of India, through positive intervention had effectively cushioned its economy from spiralling energy prices, the World needs to be cognizant that around 100 million people have been pushed away from cleaner fuels, back to coal and firewood in the last 18 months.
Minister wondered whether the global economy is again going to witness a situation similar to the economic turmoil of 2008 which had become a self fulfilling prophecy. Brent prices had initially soared from $ 93.60/bbl in January 2008 to $ 134.3/bbl in July 2008, fueling an accelerated global economic meltdown, leading eventually to demand destruction and very low oil prices.
In the interest of global good, Minister advocated balancing global energy markets by ensuring that crude oil prices do not outstrip the paying ability of the consuming countries.
Minister urged OPEC to recognize the gravity of the current economic situation and urged the Secretary General to use his office to imbue a sense of pragmatism, balance and affordability in the oil markets.