Close allies Saudi Arabia and India should make efforts to defuse tensions over rising oil prices, as there is too much at stake for both nations, according to experts.
While New Delhi and Riyadh have long maintained cordial relations, the latter’s decision to unilaterally curtail production by 1 million barrels per day has adversely affected India, one of the major fuel consumers.
This was done in addition to the nearly 7 million barrels of collective cuts, that were being implemented by the Organization of the Petroleum Exporting Countries (OPEC) and its allies.
Saudi Arabia had said that its decision was influenced by the fragility of global oil demand at a time of the Coronavirus pandemic ravaged the economy.
However, the decision has had adverse effects on major consumers like India, for which the surge in crude prices has been above the levels they might have earlier expected.
Like other nations across the world, India too has faced major troubles while dealing with the Covid-19 pandemic, and the rise of oil prices has only added to its woes.
India’s Petroleum Minister Dharmendra Pradhan has repeatedly urged Saudi Arabia and the OPEC+ group of countries to begin easing their cuts through the first two months of the year, as he feels that the rising prices will hamper the global economic recovery.
However, earlier this month, the OPEC+, the Organization of the Petroleum Exporting Countries and its allies, still decided to leave the output unchanged despite the oil prices now being double of what they were in November.
It has certainly not gone down well with India. “The decision by OPEC+ has saddened us. It is not good news for India, China, Japan, Korea, and other consuming nations,” said Pradhan told Reuters.
An Indian government official told the news agency that New Delhi has asked companies to aggressively look for diversification. “We cannot be held hostage to the arbitrary decision of Middle East producers,” he said,
Reacting to comments made by Indian officials, Saudi Arabia’s energy minister said that New Delhi should first use the stocks of crude that it purchased cheaply during the price slump in 2020.
However, according to John Kemp, an energy expert with Reuters, India and Saudi Arabia should not let the disagreement poison their overall relationship as there is too much at stake for both countries.
He said that the disagreement underlined the interdependence of both nations in terms of petroleum trade.
Barring this temporary hiccup fuelled by the rising oil prices, India-Saudi Arabia relations are on the right track. Last month, the two countries agreed to create a joint working group on defense and security.
The decision was made during the first meeting of the Committee on Political, Security, Social and Cultural Cooperation (PSSC) on February 3.