Even as global oil markets are on edge over the current escalation in conflict in the Middle East, Oil Minister Hardeep Singh Puri on Monday said that there will be no shortage of crude oil in the short to medium term.
The Minister, however, emphasised that an “exacerbation” in the conflict can adversely impact crude oil availability.
Speaking to reporters on the sidelines of an event organised by ExxonMobil, Puri said: “Our (India’s) energy consumption has been steadily growing. Today, there is more oil available in the world than there is consumption. If some parties hold back on availability, there are new suppliers in the market.”
“Also, in the short to medium term, I don’t see any shortage of oil in the world. The rest you know, we are now buying from 39 sources. Earlier we were buying from 27. There is enough oil available, and we have enough choices to exercise,” he said.
Navigating the crisis
On India’s plans to deal with the Middle East crisis, Puri said “One, we are watching the situation very very carefully. Two, energy availability can get affected if there is an exacerbation, that goes without saying. Speaking on my behalf, I am very confident that we will be able to navigate the situation as we have done so far. I am also counting on the goodwill of all the state and non-state actors to carefully weigh the consequences of any actions that might be contemplated going forward.”
Even as the Oil Minister in the world’s third largest crude oil importer tried to assuage fears of further volatility in markets, Brent on Monday edged up further close to hitting $80 per barrel ($79.22 at 1915 hours). If oil prices surpass $80 a barrel, this will be for the first time since late August 2024.
Between September 10 and October 7, Brent prices have risen from $69 to almost hitting $80 a barrel, which is the fiscal break-even price for Saudi Arabia. The current volatility is due to fresh tensions between Israel and Iran, which began last week with the latter firing a barrage of missiles on the former, who has vowed to strongly retaliate.
Oil demand
An official with a domestic refiner said: “On the one hand, there is this escalating conflict in the Middle East that may or may not see Iran’s oil infrastructure being attacked or Iran itself blocking the Strait of Hormuz. Countering it is the weak global (oil) demand outlook, slowdown in the Chinese economy and a pending reversal to the OPEC+ production cuts. Let’s see how these pan out.”
The International Energy Agency (IEA) in its September oil market report pointed out that global oil demand growth continues to decelerate, with reported H1 2024 gains of 800,000 barrels per day (b/d) Y-o-Y—the lowest since 2020. Outside of China, oil demand growth is tepid at best.
In an apparent effort to halt the precipitous slide in oil prices, the IEA said that Saudi Arabia and its OPEC+ allies in early September announced that they would postpone by two months the planned unwinding of extra voluntary production cuts.
“But with non-OPEC+ supply rising faster than overall demand – barring a prolonged stand-off in Libya – OPEC+ may be staring at a substantial surplus, even if its extra curbs were to remain in place,” it added.
Last week, the Libyan government said that it would reopen all oil fields and export terminals, returning around 700,000 barrels per day (b/d) of crude to the market.