The decision of OPEC+ to cut oil production may push up already high prices, leading to higher import bills for nations like India, according to International Energy Agency (IEA). The agency has also termed is as "risky for the global economy". Fatih Birol, head of the Paris-based energy watchdog, said global oil markets were already set to tighten in the second half of 2023, with the potential for a substantial supply deficit to emerge.
Commerce and Industry Minister Piyush Goyal said, "The cut of the additional production would mean that we have all the reasons to believe that there could be an upward pressure on the prices. At this juncture of time when the global economy is still very fragile and many emerging countries have difficulties with economic performance, I found this decision risky for the global economy."
Asked if oil prices could go past $100 per barrel again, Goyal said, "I think we are all the day but $85 now, and looking at the second half of this year, I have reasons to believe that it can go even higher at current levels".
India, which is the world's third-largest oil-importing and consuming nation, meets 85 per cent of oil needs through imports. The country spent $118 billion on oil imports in the first 11 months of the 2022-23 fiscal year.
According to PTI report, higher oil prices will not just translate into inflationary pressure on other commodities but will also lead to a larger import bill for nations like India, which are dependent on overseas supplies to meet their requirements. "India is an energy important country, oil important country, a majority of the oil consumed in India is important, such a move could increase India's oil import bill and as such a burden on the Indian economy and Indian consumers," Birol said.
The IEA chief pointed out India's economy is strong and continues to be stronger. "We expect the Indian economy will soon be the third largest economy of the world and the growing economy needs... we do revise our numbers all the time but I expect that the Indian economy will still be strong this year, one of the strongest in the world. And as such, we require strong oil and electricity demand," he said.
The IEA head said India was doing this in a transparent way and within the international rules and regulations. "And India is profiting by...importing of crude at a lower discounted price than the others. This is definitely a legitimate step."