Abu Dhabi: Minister of Petroleum & Natural Gas Hardeep Singh Puri urged the OPEC (Organisation of the Petroleum Exporting Countries) to imbue a sense of pragmatism, balance and affordability in the oil markets. Puri, who is in Abu Dhabi to attend the annual Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2023, held bilateral discussions with OPEC Secretary General Haitham Al-Ghais on the sidelines of the event on Tuesday.
Addressing the OPEC crude production cuts and its impact on global energy sector, the minister said that due to the production cuts carried out by OPEC (10) and OPEC+ countries from August 2022 onwards, effectively around~5 percent of the total global oil availability has been removed from the market, causing crude oil price to rise ~34 percent in just last three months.
Cumulatively, OPEC and OPEC+ have reduced the availability of oil by 4.96 mb/d (~5 percent of global oil demand) from the market since 2022, spiking brent prices from ~$72/bbl in June to ~$97/bbl in September.
These cuts have been made despite growing energy demand. Brent Crude oil prices jumped from $~72 /bbl in June to $~97/bbl in September, placing severe strains on the capacities of most oil importing/consuming countries.
Puri stated that the cuts have been announced in the background of the geopolitical crisis of 2022, which has added to existing inflationary pressures and created a real risk of recession in large parts of the world.
The minister further noted that while the government, through positive intervention had effectively cushioned its economy from spiralling energy prices, the world needs to be cognisant that around 100 million people have been pushed away from cleaner fuels, back to coal and firewood in the last 18 months.
Puri 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 the global good, the minister advocated balancing global energy markets by ensuring that crude oil prices do not outstrip the paying ability of the consuming countries.
The minister urged OPEC to recognise 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.