Oil producers, importers divided on price volatility
Oil producers, importers divided on price volatility
SINGAPORE (AFP): A gulf between oil-producing and importing countries over how best to combat price and supply volatility was exposed at a regional petroleum conference here Tuesday.
India, one of Asia's biggest oil importers, urged major producers to act immediately to bring down high oil prices which are aggravating the global economic downturn, particularly in developing countries.
"It is my perception that low oil prices would stimulate growth in today's sagging global economy and thereby result in high oil demand, directly benefiting the oil exporting countries, and this will be a win-win situation for both the producing and consuming countries," said Ram Naik, India's Minister of Petroleum and Gas.
"The volatility in international oil prices produces adverse effects in the economic conditions of a country. The effect is more severe in case of developing countries which cannot afford high oil prices," Naik said on the second day of the three-day conference.
India imports nearly 70 percent of its oil needs, with the oil import bill last year totaling 800 billion rupees (US$17 billion).
But Oman, a non-OPEC oil producer with a daily production of 900,000 barrels of crude, disagreed that oil producers should bear the sole responsibility of resolving price volatility.
"To us the producers, we really need to sell whatever we produce. It is no secret that many producing nations rely heavily on the oil revenue," said the sultanate's oil and gas minister Mohammed bin Hamad al-Romhi.
"We are also developing countries and we are very sympathetic to the developing countries when the price is high," he said.
According to Naik, a prolonged period where crude oil prices stayed above $20 a barrel would be detrimental to importing nations, especially the developing countries.
"Such unrelenting high oil price scenario is apparently taking its toll on the economies across the globe, and more severely on the developing countries," Naik said.
At the moment, the average price of Brent North Sea crude for October delivery is above $26 a barrel.
The Indian minister called on the oil producers to help the developing countries cope with the high oil prices by offering credit extension, price discounts and deferred payment facilities.
"This would certainly help (in) reducing the adverse impact on the economic development of the importing countries during the period of high oil prices," said Naik.
But Oman's Rohmi said revenues from oil exports are the mainstay of the oil producing countries.
"Oil is our blood. We take it extremely seriously. But sadly no one talks to us when prices are low," Rohmi said.
He added that importing countries also benefit from the revenues generated from oil.