Generic Hero BannerGeneric Hero Banner
Latest market news

Indian oil minister warns of consequences of Opec+ cuts

  • Market: Crude oil, Oil products
  • 04/10/23

India has been a key actor in the reshaped oil market of the past two years, absorbing much of Russia's redirected crude exports to cement its position among the world's fastest-growing oil demand countries. And it is pursuing further growth in oil products, through ambitious plans for refinery construction. But it remains a price-taker, and has been vocal on the need to allow developing economies room to breathe. India's oil minister Hardeep Singh Puri spoke to Argus at the Adipec conference in Abu Dhabi on 3 October about Opec+, oil prices and supply, and those refinery plans. Edited highlights follow:

You were expressing concerns around Opec production cuts when prices were around $75/bl. Now it is a different situation, and we are at around $90/bl. What is your message to Opec and Opec+ ministers? They are about to meet again to decide if any changes are needed to policy.

There is a context to everything. When I was expressing concern, even then I said it is your sovereign right, every producer's sovereign right, to decide how much crude oil you want to produce. You tell me that you don't determine the price, to which I say my understanding is that the amount of oil which is produced and released into the market in turn determines the price.

So, when at $75/bl, I was making a philosophical point. Today, well the price has come down by $5/bl since yesterday, but I'm making a point in a different context. What has happened in the last few months is that 5.2mn b/d of oil production has been taken off through voluntary production cuts. I am not getting into who has done it or why it was done. As against 102mn b/d that you had, you're down by 5.2mn b/d. Now, what has happened is they say that "we are trying to anticipate" because there is a reduction in demand. This is neither here nor there. You have got a problem on your hands.

This has happened once earlier. In 2008, the price had gone up to $130/bl and it came crashing down to $36/bl, which was neither in the interest of producers nor of consumers.

My limited point is that if you think that an unrealistic price can be taken and sustained by the market, then I place the following facts before you. It is not my opinion, the fact is half the world is either under, in, or slightly below recession. Even the economies which are not in recession are flirting with the whole idea of recession. Quarter to quarter, growth is 0.1pc down, 0.8pc up — that is not a very healthy situation.

Secondly, clearly you have a lot of inflationary liquidity caused by stimulus packages etc during the pandemic. You have the liquidity in the market, people have been trying to raise interest rates to mop up the liquidity. If on top of that you get high prices, then it tips that inflationary situation into a really big [arc]. That is the consistency in my argument of between $75/bl and $90/bl.

I talk to the main companies in the world, some of them think, well, it will peak and then come down to $70-75-80/bl. That's neither here nor there. We have to be responsible for what we do.

On behalf of India, my position has always has been that it's a sovereign right to determine how much you want to [produce], but don't be unmindful of the consequences. And it can become a self-fulfilling prophecy that demand will drop because people don't have the capacity to sustain it. My take is that in the last 18 months this has driven some 100mn people into abject poverty. People have gone back to using unconventional or non-conventional firewood for cooking and other purposes.

Therefore, it's not [a question of] how much it affects India. Of course India would be happier if oil prices were $80/bl or below, but India will survive. India has the capacity. We are also a major producing country now, we're also a major exporting country now. But it's a question of what happens in the global economy, which is far from recovered from a number of crises.

What about the idea that higher prices are needed to drive the investment required to sustain production in the longer run?

I have heard this argument many times earlier. Sure, there should be more investment. But when you take 5.2mn b/d out, it is not due to a lack of investment. You've taken it out because you want to do supply-side management.

So, if we talk about India's crude imports, the pattern of crude imports has obviously changed in the last year and a half or so. First we saw rising imports from Russia and then reduced flows from the Middle East. Over the last few months, we have seen something of a reversal on that side. How do you see this evolving going forward?

I think it's a very simple explanation. The Indian government doesn't buy oil. We tender. Our companies, some of them are purely private-sector companies, while some are public sector, but at arms length. They will issue tenders and they will buy oil from wherever they can get it at the cheapest price.

There was a time before February 2022 when our total imports from Russia wouldn't show up in any calculation. They were what you guys call de minimis — 0.2pc. It didn't show up. But you know where the market started going and Russia wanted to export etc. The Russians still produce 11mn b/d and they consume 4mn b/d or so. They still have to sell the 7mn b/d. So, what happens if India is not buying it? And if India starts buying Middle Eastern oil instead, then the price will go up even more. So, it's a complicated situation.

My own sense is that this price sensitivity being a determinant should also be seen in terms of the diversification we have done. Earlier we used to buy from 27 countries — we are buying from 39 countries now. And then there are all manner of people who come in and say, well, we want to sell oil. As long as I'm clear it's not sanctioned oil or something like that, we will buy it.

In terms of the Russian oil payment structure, is that something done in rupees?

There are some discussions on it. I think we've done a rupee payment with the UAE in one consignment, but it is a small percentage — 10pc only.

So, this is not something we are likely to see much more of in the future?

No, no, we would be happy to do it but then it takes two to tango. You need to work on an ecosystem to be able to do that. Somebody asked me today if I see de-dollarisation. I think it's too early for that. I still see the US as the major economy, the world's largest economy that's going to be around for a long time.

A big Saudi delegation came to India after last month's G20 summit. Were there any discussions around the Ratnagiri refinery joint venture with Saudi Aramco?

The discussion is still on but let me give you a perspective on that. Typically, a refinery in India is about 11mn t/yr (220,000 b/d). This predates me as minister. The discussion in Ratnagiri was for a large refinery of 60mn t/yr, which is huge. So, I think you're probably better off in terms of sure ground footing to have three refineries of 20mn t/yr each because there are local issues. Not just in India, even outside, I don't know if anybody has experience in producing and running a refinery of 60mn t/yr. It is very high.

We are keen on it. We are expanding our refining capacity. We're at about 252mn t/yr, we are taking that to 300mn-330mn t/yr and ultimately to 400mn-450mn t/yr. We have very good relations with the Saudis. Very important, not only in the energy sector, but elsewhere. But on individual projects, I would not know. We have a lot of actors who would act on this.

There were issues regarding land ownership around the refinery. Is there anything that could be done from the government side to move things along?

The government will encourage, but I think it's better if you can break it into three 20mn t/yr refineries rather than a 60mn t/yr one. There has been a lot of talk about it.

When you see the Saudis in China, for example, you're seeing a lot of downstream investment going into China. Is this something India is also looking at and thinking you'd like to attract as well?

We are open to all manner of investments. But obviously Indian companies will look at bilateral investments in terms of what is win-win for them. If they're already strong in an area, why would they want outside investment now? Fortunately, for the energy sector, we have a large number of companies who are doing very well. IOC, ONGC, HPCL and BPCL, they are doing well but are also looking to acquire assets outside. So, it is a question of synergies and doing good commercial negotiations.

So focusing on Saudi investment is not something India is necessarily looking to do?

India is looking to do business with everybody. India, we have $16bn of investment in Russia — Russia has $13bn of investment in India. There is a lot of Saudi investment which we welcome to India, from the UAE or all over the world.

Following recent discussions with Iraq, there was an announcement that India would like to increase oil imports beyond the total 1bn bl that it currently takes annually. Is there any reference point for the size of such an increase?

It's all price sensitivity. In India, the government does not do the oil buying. We don't do the target setting either. Typically, we used to import 4mn-5mn b/d roughly for our refining, out of which we equally divided 800,000 b/d between four or five suppliers, and the rest would come from outside. I've seen the Iraqis move up very quickly. I think it's over 1mn b/d [that Iraq supplies to India] now if you look at the total capacity. I see that the supply is increasing. And there is a good reason for all this. This is a tender which is being floated and you decide if you want to respond with a price. Some others may be discussing charging an Asian premium or some extra price etc, obviously the market will move away from that.

So this is more about economics than a political initiative?

There is no politics in this. We are happy with the politics of everyone. You know ultimately it is the price at which you can bring it to the consumer.


Sharelinkedin-sharetwitter-sharefacebook-shareemail-share

Related news posts

Argus illuminates the markets by putting a lens on the areas that matter most to you. The market news and commentary we publish reveals vital insights that enable you to make stronger, well-informed decisions. Explore a selection of news stories related to this one.

News
13/03/25

Dangote refinery buys first cargo of Eq Guinea crude

Dangote refinery buys first cargo of Eq Guinea crude

London, 13 March (Argus) — Nigeria's 650,000 b/d Dangote refinery has bought its first cargo of Equatorial Guinea's medium sweet Ceiba crude, according to sources with knowledge of the matter. Dangote bought the 950,000 bl cargo loading over 12-13 April from BP earlier this week, sources told Argus . Price levels of the deal were kept under wraps. Most Ceiba exports typically go to China. Around 18,000 b/d discharged there last year, while three shipments went to Spain and one to the Netherlands, according to Vortexa data. This year, two cargoes loading in February and March are signalling Zhanjiang in China, according to tracking data. Traders note that buying a Ceiba cargo is part of Dangote's efforts to diversify its crude sources. Last month the refinery bought its first cargo of Algeria's light sweet Saharan Blend crude from trading firm Glencore, which is due to be delivered over 15-20 March. Market sources said Dangote seems to have sourced competitively priced crude from Equatorial Guinea at a time when domestic grades are facing sluggish demand from Nigeria's core European market amid ample supply of cheaper Kazakh-origin light sour CPC Blend, US WTI and Mediterranean sweet crudes. Several European refineries are due to undergo maintenance in April, which is also weighing on demand. Nigeria's state-owned NNPC is currently in negotiations with the Dangote refinery about extending a local currency crude sales arrangement , which involves crude prices being set in dollars and Dangote paying the naira equivalent at a discounted exchange rate. Any changes to the terms of the programme may pressure Dangote to increase the amount of foreign crude in its slate. Refinery sources told Argus in January that Dangote will source at least 50pc of its crude needs on the import market and is building eight storage tanks to facilitate this. By Sanjana Shivdas Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Find out more
News

Nigeria's port authority raises import tariffs


13/03/25
News
13/03/25

Nigeria's port authority raises import tariffs

London, 13 March (Argus) — The Nigerian Ports Authority (NPA) has raised tariffs by 15pc on imports "across board", taking effect on 3 March, according to a document shown to Argus . The move comes as the independently-owned 650,000 b/d Dangote refinery continues to capture domestic market share through aggressive price cuts, pushing imported gasoline below market value in the country. Sources said that Dangote cut ex-rack gasoline prices to 805 naira/litre (52¢/l) today, from between 818-833N/l. The rise in NPA tariffs may add on additional cost pressures onto trading houses shipping gasoline to Nigeria, potentially affecting price competitiveness against Dangote products further. The move would increase product and crude cargo import costs, according to market participants. But one shipping source said the impact would be marginal as current costs are "slim", while one west African crude trader noted that the tariffs would amount to a few cents per barrel and represent a minor rise in freight costs. Port dues in Nigeria are currently around 20¢/bl, the trader added. One shipping source expects oil products imports to continue to flow in, because demand is still there. Nigeria's NNPC previously said the country's gasoline demand is on average around 37,800 t/d. Over half of supplies come from imports, the country's downstream regulator NMDPRA said. According to another shipping source, Dangote supplied around 526,000t of gasoline in the country, making up over half of product supplied. The refinery also supplied 113,000t of gasoil — a third of total total volumes in the country — and half of Nigeria's jet at 28,000t. By George Maher-Bonnett and Sanjana Shivdas Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

US lube industry wary of tariffs uncertainty


13/03/25
News
13/03/25

US lube industry wary of tariffs uncertainty

London, 13 March (Argus) — The uncertainty around US tariffs could weigh on demand for finished lubricant and base oil, trade body ILMA told Argus . US President Donald Trump has decreed a 25pc tariff on steel and aluminium imports from Canada, a key import source for these materials used in auto manufacturing. The US sources about 70pc of its aluminium imports and around 23pc of its steel imports from its northern neighbour. ILMA chief executive Holly Alfano said the White House recognises that the uncertainty surrounding tariffs "creates a challenging business environment". "A slowdown in auto sales and production due to tariffs could lead to reduced demand for these products," Alfano told Argus. "Manufacturers may postpone investments or expansion plans due to unpredictable costs and market conditions," she said. "If vehicle prices rise due to increased production costs, consumer demand may decline, leading to further reductions in automotive output and associated lubricant consumption." Automotive vehicle production forecasts have fallen to 15.5mn in 2025 since the tariff announcement, down by 250,000 vehicles from the prior estimate by AutoForecast Solutions. This would put output broadly in line with 2024 , stifling growth in finished lubricant demand. US government data show car sales fell by 5pc in 2024, and finished lubricant sales dropped 6pc over the same period. Although lubricant sales are not entirely correlated with new car sales, Alfano noted the auto sector is "a significant consumer of finished lubricants". As it stands the tariffs on steel and aluminium will not now be implemented until 2 April. The White House has said this is to "allow for the flow of parts and sub assembly products into America, to allow American car manufacturers to continue building cars." The US administration is scheduled to host Canadian and Ontario officials today to discuss a possible easing in tariffs. If these talks yield no progress, and if a month is insufficient for supply chains to be reorganised, the tariffs could stunt automotive manufacturing and in turn lubricants needed for these new vehicles. Ontario premier Doug Ford has cautioned the 25pc tariffs could halt the auto manufacturing industry in as little as 10 days. While the US is self-sufficient in terms of its Group II base oils, it is a net importer of Group III, with only 4pc nameplate capacity, and both are key to automotive lubricant production. The US is an importer of Canadian Group III base oils from Petro-Canada's 4,000 b/d plant in Mississauga, Ontario. By Gabriella Twining Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

IEA says trade tensions clouding oil demand outlook


13/03/25
News
13/03/25

IEA says trade tensions clouding oil demand outlook

London, 13 March (Argus) — The IEA today downgraded its global oil demand growth forecast for 2025, noting a deterioration in macroeconomic conditions driven by rising trade tensions. It sees a larger supply surplus as a result, which could be greater still depending on Opec+ policy. The Paris-based agency, in its latest Oil Market Report (OMR), sees oil demand rising by 1.03mn b/d to 103.91mn b/d in 2025, down from a projected rise of 1.10mn b/d in its previous OMR. The IEA said recent oil demand data have underwhelmed, and it has cut its growth estimates for the final three months of 2024 and the first three months of this year. US President Donald Trump has imposed tariffs on various goods arriving in the US from China, Mexico and Canada, as well as on all imports of steel and aluminium. Some countries have retaliated with tariffs of their own on US imports, raising the prospect of a full-blown trade war. The IEA said US tariffs on Canada and Mexico "may impact flows and prices from the two countries that accounted for roughly 70pc of US crude oil imports last year." But it is still too early to assess the full effects of these trade policies on the wider oil market given the scope and scale of tariffs remain unclear and that negotiations are continuing, the IEA said. For now, the IEA's latest estimates see US demand growth this year slightly higher than its previous forecast. It sees US consumption increasing by 90,000 b/d to 20.40mn b/d, compared with a projected rise of 70,000 b/d in the prior OMR. The downgrades to its global oil demand forecast were mainly driven by India and South Korea. The agency also noted latest US sanctions on Russia and Iran had yet to "significantly disrupt loadings, even as some buyers have scaled back loadings." The IEA's latest balances show global supply exceeding demand by 600,000 b/d in 2025, compared with 450,000 b/d in its previous forecast. It said the surplus could rise to 1mn b/d if Opec+ members continue to raise production beyond April. Eight members of the Opec+ alliance earlier this month agreed to proceed with a plan to start unwinding 2.2mn b/d of voluntary production cuts over an 18 month period starting in April. The IEA said the actual output increase in April may only be 40,000 b/d, not the 138,000 b/d implied under the Opec+ plan, as most are already exceeding their production targets. The IEA sees global oil supply growing by 1.5mn b/d this year to 104.51mn b/d, compared with projected growth of 1.56mn b/d in its previous report. The agency does not incorporate any further supply increases from Opec+ beyond the planned April rise. The IEA said global observed stocks fell by 40.5mn bl in January, of which 26.1mn bl were products. Preliminary data for February show a rebound in global stocks, lifted by an increase in oil on water, the IEA said. By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

News

Opec sticks to demand forecasts despite trade tensions


12/03/25
News
12/03/25

Opec sticks to demand forecasts despite trade tensions

London, 12 March (Argus) — Opec has kept its oil demand growth forecasts unchanged for both 2025 and 2026 on expectations that the global economy will adjust to volatile trade policies. US president Donald Trump has imposed tariffs on various goods arriving in the US from China, Mexico and Canada, as well as on all imports of steel and aluminium. Some countries have retaliated with tariffs of their own on US imports, raising the prospect of a full-blown trade war. But Opec is confident that the global economy can adapt. "Price pressures may weigh on global growth but are unlikely to disrupt overall growth momentum, which remains supported by resilient consumer demand and strong output in major emerging economies," Opec said in its latest Monthly Oil Market Report (MOMR). Opec also said that rising trade among emerging economies could partially offset tariff-related disruptions, but it warned that "downside risks need to be monitored given uncertainties in policy rollout and subsequent effects and impacts". Despite the uncertainty, Opec kept its oil demand forecast for this year and next unchanged for the second month in a row. For this year, the group sees oil demand growing by 1.45mn b/d to 105.2mn b/d, while in 2026 it sees consumption increasing by 1.43mn b/d to 106.63mn b/d. Opec's demand growth forecasts remain somewhat higher than those projected by the IEA and the US' EIA. In terms of supply, the group kept its non-Opec+ liquids growth forecast unchanged at 1mn b/d for both 2025 and 2026, with most of this growth seen coming from the US, Brazil and Canada. Opec+ crude production — including Mexico — rose by 363,000 b/d to 41.011mn b/d in February, according to an average of secondary sources that includes Argus . Opec puts the call on Opec+ crude at 42.6mn b/d in 2025 and 42.9mn b/d in 2026, unchanged from last month. Eight members of the wider Opec+ alliance earlier this month agreed to start increasing crude output from April, citing "healthy market fundamentals and the positive market outlook". By Aydin Calik Send comments and request more information at feedback@argusmedia.com Copyright © 2025. Argus Media group . All rights reserved.

Generic Hero Banner

Business intelligence reports

Get concise, trustworthy and unbiased analysis of the latest trends and developments in oil and energy markets. These reports are specially created for decision makers who don’t have time to track markets day-by-day, minute-by-minute.

Learn more