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.