PM pitches for partnership of oil producers, consumers to stabilise economy

Oil imports

U.S. crude futures climbed 80 cents, or 1.12 percent, to $72.14 a barrel, extending gains they racked up on Friday after hefty losses on Wednesday and Thursday.

India now imports more than 80 percent of its oil needs. Iran is its third-largest supplier after Iraq and Saudi Arabia and meets about 10 per cent of India's total needs.

Crude oil futures rose on Monday as geopolitical tensions over the disappearance of a prominent Saudi journalist stoked worries about supply, although concerns about the long-term outlook for demand dragged on prices. "That is the primary challenge", Pradhan said.

Oil imports from Iran have declined for the past months. He noted that the oil market is producer driven and both the quantity and prices are determined by the oil-producing countries. "Issue is sentiment", he said.

The government is looking at private investment to raise domestic oil and gas production, which has stagnated for the last few years while fuel demand has been rising by 5-6 per cent annually.

Prices hit a four-year high of $86.74 a barrel earlier this month as the market grapples with the expected loss of Iranian exports due to United States sanctions.

An American government official said in early October that the USA government was actively considering waivers on sanctions for countries that are lowering their imports of Iranian oil.

"But Saudi Arabia pro-actively and responsibly invested to strengthen our spare capacity and so averted a major price shock".

Asked whether India has sought waiver from the U.S. related to Iranian oil imports as Indian oil firms have booked Iranian oil cargo for November, he said "sentiment" rather than availability is the issue. Subjects such as expansion of oil and gas infrastructure in India; enhancing exploration and production; potential in solar energy and biofuels; and the government's holistic approach to the energy sector came up for discussion. Out of this, supplies in the first seven months, till October, have not been impacted.

"When oil companies enter into annual term contracts for buying crude oil, there are two components mentioned - firm supplies and optional supplies". The meet was part of 40 heads of top oil companies and organisations.

Last week, Pradhan said Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals (MRPL) have together placed orders for import of 1.25 MT of crude oil from Iran.

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