Global oil cartel and a brewery buyer’s group

Two government officials, who asked for anonymity, said the plan seeks to coordinate the sourcing of crude oil by state-run and private refiners before joining other major Asian oil importers such as Japan and South Korea.

“After bringing together refiners from the public and private sectors, we also plan to talk to major Asian energy buyers,” said one of the two officials.

An earlier effort to form a buyer collective between China and India, the world’s second and third largest oil importers, had failed to gain traction last year following a border conflict between the two Asian neighbors.

“The Organization of the Petroleum Exporting Countries (OPEC) has artificially kept the supply of crude oil below demand. Even the prices of the product have gone up. It has become a seller’s market. There is a shortage in other countries as well. We are not allowing such a situation to happen in India. Our oil marketing companies are ensuring availability. OPEC is restoring production but at a very slow pace,” said the person quoted above.

OPEC accounts for about 40% of global production and a major part of India’s crude oil imports. The OPEC-Plus group of 23 countries, including Russia and its allies, have cut production, raising prices around the world.

The rise in prices is also due to declining investment in the sector amid the global transition to green energy. As a result, the Indian basket of crude rose to $73.13 a barrel in September, according to data from the Petroleum Planning and Analysis Cell, at a low of $19.90 a barrel since April 2020 after a post-Covid-led demand slowdown.

To be sure, the central and state government’s decision to maintain high tax rates on transport fuel also contributed to the record high retail prices. ₹107.59 per liter for petrol and ₹99.61 per liter for diesel in Delhi on Monday, when India’s fuel consumption has risen 15-16% from pre-Covid levels.

The response to the public-private playbook for sourcing crude oil has been very encouraging, Union Minister of Petroleum and Natural Gas Hardeep Singh Puri said at a press conference in New Delhi on Friday after the fifth India Energy Forum by CERAWeek.

A spokesman for the Ministry of Petroleum and Natural Gas declined to comment on the proposed coordinated sourcing approach and the possibility of major Asian crude oil consuming countries joining the forum.

India spent $62.71 billion on crude oil imports in 2020-21, $101.4 billion in 2019-20 and $111.9 billion in 2018-19.

India had raised concerns over high oil prices with OPEC Secretary General Mohamed Sanusi Barkindo during his recent visit to India. The discussions also focused on the need to find a balance between the needs of suppliers and consumers. India has been taking up the issue with major oil producing countries like Saudi Arabia, Kuwait, Qatar, United Arab Emirates, Bahrain, US and Russia.

Puri said on Friday that if high crude oil prices are not curbed, it will have an impact on the global economic recovery. “It is beneficial only if the price matrix takes care of the needs of consumers and producers,” he said.

Global energy markets are in a frenzy with rising energy prices in crude oil, gas and coal. India is also requesting OPEC for a reduction in the official selling price, extension of the bill of lading credit period from the current 30 days to 90 days, freight rebates and open credit based on the creditworthiness of Indian state-run refineries .

India, one of OPEC’s major consumers, has also called for a global consensus on “responsible pricing” and pushed for price and terms reforms at the so-called Asian premium.