'Organised chaos' if crude oil tops $100 per barrel: Oil minister Hardeep Puri
Union Minister for Petroleum and Natural Gas Hardeep Singh Puri has warned that crude prices topping $100 per barrel mark is not in anyone's interest. While India could weather higher crude oil prices, other developing nations may not be able to do so.
Union Minister for Petroleum and Natural Gas Hardeep Singh Puri has said India will be able to manage oil prices above $100 per barrel, but it could lead to "organised chaos". Puri was speaking at the ADIPEC oil and gas conference in Abu Dhabi, United Arab Emirates on Tuesday, October 3, and ahead of a crucial OPEC meeting in Vienna on Wednesday, October 4, to discuss the current market dynamics. The cartel is expected to continue its existing output policy.
"If the price goes above $100, it’s not going to be in the interest of either the producing country or anyone’s interest. You will have large, organised chaos,” CNBC.com quoted Hardeep Singh Puri in an interaction with CNBC’s Dan Murphy during a panel at the conference.
While Brent crude oil prices have eased in the previous two days after crossing the $97-per-barrel mark last week, they have largely traded above $90 a barrel since Saudi Arabia and Russia decided to extend voluntary cuts to year-end.
The oil minister said that the price of $100 a barrel of oil was not in the interest of either the producing countries or the consumers. He had a bilateral discussion with OPEC Secretary General Haitham Al-Ghais.
"In the interest of global good, the Minister advocated balancing global energy markets by ensuring that crude oil prices do not outstrip the paying ability of the consuming countries," stated a release from the Ministry of Petroleum and Natural Gas on late Tuesday, October 3.
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While Puri was confident that India could navigate higher prices, he warned that other nations may not be able to do so.
“You should not be worrying about the impact on India. India has a large economy that has a lot of domestic production. We’ll cut back, we’ll do something or the other," CNBC.com quoted him as saying.
Puri highlighted that rising prices in the last 18 months have placed 100 million people into abject poverty and pushed them away from reasonably priced gas and cooking fuels to coal and firewood.
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In a separate interview with news agency Bloomberg, Puri cautioned that the global economy is again going to witness a situation similar to the economic turmoil of 2008 which had become a self-fulfilling prophecy. In 2008, Brent prices had jumped from $93 levels per barrel at the start of the year to the levels of $134 per barrel in July 2008, accelerating the global economic meltdown, which eventually hurt the overall demand and brought oil prices lower.
High oil prices could lead to a repeat of 2008 when oil markets crashed!
A famous man, not so popular now, wrote in mid 19th century that “Hegel said, history repeats itself” he further wrote “Hegel should have added, first time as history, second time as farce!”@BloombergTV pic.twitter.com/a7QUJNpto5— Hardeep Singh Puri (@HardeepSPuri) October 4, 2023
India depends on imports for about 85% of its crude oil needs with 60% of its oil imports worth $101 billion from OPEC nations.
Meanwhile, OPEC's Al Ghais also cautioned that the oil industry needs a total investment of at least $12 trillion between now and 2045 to prevent a spike in energy prices and the sector currently suffers from "underinvestment", which is "dangerous".
“By underinvesting, we are actually endangering energy security… Without this (investment), I think there are serious possibilities that prices, the volatility, will be increasing as demand grows,” CNN.com quoted Al Ghais as saying.
The head of the OPEC also highlighted that the energy future of the world can't be satisfied by renewables alone or by relying on hydrogen as an energy source.
First Published: Oct 4, 2023 3:30 PM IST
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