Oil producers’ cartel charges Asian nations a premium on every barrel of crude over the price for western buyers. India, the world’s third largest oil consumer, says its regional peers must come together to negotiate better terms.
“I see bigger cooperation between four major economies of Asia — India, China, Japan and Korea. India will try to create a network among these four economies,” said Dharmendra Pradhan, minister for petroleum and natural gas, on the sidelines of an event in New Delhi on Thursday. “Why the biggest consumers of the world are paying more? Why are we continuously paying more in the name of Asian premium?”
Oil is at a three-year high because of production cuts the Organization of Petroleum Exporting Countries members agreed to in November 2016. Brent crude has since risen about 50 percent to $75 a barrel. Falling output in Venezuela, fears of fresh U.S. sanctions on Iran and the recent flare¬-up in Syria have added to the crude rally. Retail prices of petrol and diesel in India, which relies on imports to meet 80 percent of its needs, are at a record. The government, which in October reduced the excise duty to cushion consumers, has so far ruled out further cuts.
“We are concerned about the pinching price,” Pradhan said. “We are appealing to states to reduce the value added tax.”
The oil import bill is estimated to increase 20 per cent to $105 billion this financial year assuming the Indian basket crude price at $65 a barrel and an exchange rate of Rs 65 to a dollar, a recent report by Petroleum Planning and Analysis Cell said.
Pradhan said consumers and producers have an equal say in a balanced market. “So, I say not just India and China, all the four major Asian economies should come together. India will try to create a network for that within the four countries to create better terms with sellers.”