Yemisi Izuora
Brent crude hit $80 a barrel Thursday for the first time since late 2014, extending a recent run higher fuelled by tight supply concerns.
Prior to Thursday’s peak oil prices had already been rising prompted by steady demand growth and a landmark deal by oil producing countries, both inside and outside the Organization of Petroleum Exporting Countries, OPEC cartel, to lower output.
Meanwhile, Saudi Arabia said on Thursday it would make sure the world is adequately supplied with oil to support global economic growth just as top consumer India expressed frustration with oil prices hitting $80 per barrel for the first time since 2014.
OPEC’s most influential energy minister, Saudi Arabia’s Khalid al Falih, called India’s Petroleum Minister Dharmendra Pradhan to assure him that supporting global economic growth was “one of the kingdom’s key goals”, the Saudi ministry said.
“He (Falih) reiterated his commitment towards market stability and that the Kingdom together with other producers will ensure availability of adequate supplies to offset any potential shortfalls,” the statement said.
The statement came as oil prices rose back to $80 per barrel for the first time since 2014 due to rising concerns over disruptions to Iranian oil exports because of new U.S. sanctions and due to plummeting output in Venezuela.
Both the Saudi and Indian ministries said Pradhan expressed concern about escalating prices and the impact it has on consumers and especially on the Indian economy, the world’s third largest oil consumer.
“I expressed my concern about rising prices of crude oil and its negative impact on consumers and the Indian economy and reiterated the need for stable and moderate crude oil prices,” Pradhan said in a statement.
The statements said Falih briefed Pradhan on his consultations with major producing countries both in and outside of OPEC, including Russia.
India is one of the world’s fastest growing energy consumers and its oil use only lags behind the United States and China.
OPEC and its ally Russia have cut their output since January 2017 to help reduce excessive global stockpiles.
So far OPEC has said it saw no need to ease output restrictions despite global stocks falling to its desired levels and despite consuming nations voicing concerns the price rally might have gone too far and could lead to demand destruction.
OPEC member the United Arab Emirates said on Thursday OPEC had bigger issues to consider than the impact of the U.S. decision to withdraw from the international nuclear deal with Iran such as Venezuela’s collapsing output.
U.S. President Donald Trump has also called on OPEC to help cool oil prices saying they were artificially high and that it was “unacceptable”.