Indian oil minister urges OPEC to wind back production cuts

London, (Quantum Commodity Intelligence) - India's oil minister has again urged OPEC+ to speed up the rate at which it unwinds production cuts, saying a it may hinder a consumption -ed economic recovery.

Dharmendra Pradhan said in a series of tweets following a virtual meeting with the OPEC Secretary General that he urged OPEC to phase out production cuts and said it would hit the economic recovery.

"I took the opportunity to express India's deep concern on increasing crude oil prices and its impact on consumers as well as on (a) smart economic recovery," Pradhan said on Twitter.

"I emphasised that high crude prices are adding significant inflationary pressure on India," he added.

Retail inflation hit 6.3% in May – a six month high as food and fuel costs rose.

Wholesale edible oil, bulk grain and oilseed prices are all running at significant highs as the cost of inputs related to energy has dovetailed with dwindling supply.

High inflation comes at a time when the country is trying to struggle from a brutal second wave of Covid-19 infections that hit demand for fuel, leaving some economists to speculate that figures could go even higher as growth rebounds.

Annoyed by the decision to prop up prices by cutting supply, India has been trying to diversify supplies away from OPEC producers and was reported to be interested in securing barrels from Guyana.

In May, India cut imports of Saudi crude as a result, but they returned to more normal levels in June, sources said.

The call for more crude supply echoes statements made earlier this month by the IEA, which said there was a mismatch this year between supply and demand, with the latter expected to reach near 101 million bpd by the end of next year.

Following record production cuts of more than 10% in 2020, OPEC+ members started to increase supply in the second quarter 2021 with an extra 350,000 bpd in May, 350,000 bpd in June, and a further 400,000 bpd for July.

However, sources say India wants the group to add at least a further 1 million bpd from August.

Global demand is approximately 95 million bpd, but the IEA expects to increase by 2 million bpd by the end of the year.