The current free fall in global oil prices where the Indian basket of crude oil has plunged below $35 a barrel will not continue, the Organisation of Petroleum Exporting Countries (OPEC) chief said on Tuesday.
“The current price situation will not continue. There will be less supply coming to the market. Over the past year, there has been a reduction of $130bn in investments for fresh production,” OPEC secretary general Abdalla Salem el-Badri told reporters in New Delhi.
“Low prices will result in supplies coming down by 400,000 barrels a day by 2016,” Badri said, following the first ever India-OPEC institutional dialogue here that was decided in June at the OPEC’s Vienna meeting in which India participated.
India’s Petroleum Minister Dharmendra Pradhan said that India has conveyed to OPEC ‘its need for reasonable and responsible pricing of oil and this is an ongoing dialogue’. “By not cutting production and keeping prices low, OPEC is helping countries like India,” Pradhan said.
Noting that OPEC said on Tuesday that India is the only emerging market where demand is growing, Pradhan said that in the period leading up to 2040, India would ‘have the highest GDP growth rate in the world’.
Assuring that India’s views would be taken into consideration while preparing OPEC’s energy outlook review, Al Badri said that as regards prices, the cartel does not maintain a target. “We look for a fair price, one that assures a reasonable income for producers, which can then be invested in production,” he said.
The Indian basket, comprising 73% sour-grade Dubai and Oman crudes, and the balance in sweet-grade Brent, plunged to $34.39 on Monday for a barrel of nearly 160 litres, as per data compiled by the state-run Petroleum Planning and Analysis Cell.
