Petroleum and Natural Gas Minister Hardeep Singh Puri on Wednesday expressed serious concern over soaring crude oil prices which, he said, could lead to a repeat of the disastrous situation in 2008 when prices skyrocketed and then crashed due to a destruction of demand.
“With the amount of inflation in the global economy, where interest rate hikes are not able to mop up the excess liquidity, you will have a situation where oil prices will repeat the 2008 scenario,” Puri said on Bloomberg TV.
He 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, fuelling an accelerated global economic meltdown, leading eventually to demand destruction and very low oil prices.
The minister said that increasing crude prices have resulted in about 100 million people around the world being pulled into abject poverty in the last 18 months.
Crude oil prices have been trading above $90 per barrel in recent weeks as major oil-producing nations led by Saudi Arabia and Russia have cut supplies to push up prices.
The Indian minister said that crude oil prices of around $80 per barrel or slightly less than that would be a convenient price range for countries.
“It is in the interest of all the countries, including oil producing and consuming, to have a healthy discussion on what constitutes a reasonable price band,” he added.
Puri met OPEC Secretary General Haitham Al-Ghais on the sidelines of the annual Abu Dhabi International Petroleum Exhibition and Conference (ADIPEC) 2023 on Tuesday and urged him to use his office to imbue a sense of pragmatism, balance, and affordability in the oil markets.
During the discussions, the Indian minister highlighted that due to the production cuts carried out by OPEC+ countries from August 2022 onwards, effectively around 5 per cent of the total global oil availability has been removed from the market, causing crude oil price to rise by a whopping 34 per cent in the last 3 months.
These cuts have been made despite growing energy demand. Brent Crude oil prices jumped from $72 a barrel (bbl) in June to $ 97/bbl in September 2023, placing severe strains on the capacities of most oil importing consuming countries.
