Indian oil minister renews call for OPEC to phase out production cuts

India has again urged OPEC to phase out its production cuts, saying the recent rise in oil prices is threatening the consumption-led recovery of the global economy.

In a virtual meeting with OPEC Secretary General Mohammed Barkindo on June 24, Indian oil minister Dharmendra Pradhan, who has sparred with Saudi counterpart Prince Abdulaziz bin Salman over supplies of crude, flagged his country's concerns over increasing oil prices, which were adding significant inflationary pressure.

India is the world's third largest consumer of crude and a key market for many OPEC members.

"We discussed recent oil market developments, trends in oil demand recoveries, economic growth forecasts and overcoming energy challenges," Pradhan said after the meeting.

OPEC, Russia and several other allies in a production accord are set to meet July 1 to decide on output quotas for August and possibly beyond. Many analysts expect the alliance to agree on a production increase of 500,000 to 700,000 b/d for August, which would still be short of the expected deficit between global oil demand and supply.

In a statement, Barkindo did not address Pradhan's concerns directly but said the outlook was improving for the world economy and that the OPEC+ alliance planned to continue to meet monthly to review market conditions and adjust production levels accordingly.

Pradhan has many times called on OPEC to provide more favorable pricing to India and stop propping up oil prices with its output cuts. Tensions escalated earlier this year with OPEC kingpin Saudi Arabia, when Prince Abdulaziz in March responded by saying India should tap into its reserves of crude that it bought cheaply in 2020 during the market crash.

India has pushed its refiners to diversify from imports of Middle East crude.

The two sides have somewhat patched up relations, with Saudi Arabia and the UAE supplying critical medicine and equipment to help India battle its second wave of coronavirus infections, as well as petroleum products.

Pradhan said he conveyed to Barkindo in their meeting his deep appreciation to those countries.