India, the world’s third-biggest oil importer, is grappling with a combination of rising oil prices and falling local currency. Retail prices for gasoline and diesel fuel in India are at record highs and the government has cut its excise tax on fuel to ease some of the pain for consumers. Meanwhile, Arabia and other major producers have shown their commitment, to cushion the market from oil price shocks, Energy Minister Khalid al-Falih said at the IHS CERA conference.
“We could have another (round of) unanticipated disruptions that we have seen in Nigeria, Libya, Venezuela. And we have seen sanctions on Iran. These supply disruptions need a shock absorber and the shock absorber to a large extent has been Saudi Arabia,” he said.
Saudi Arabia has the capacity to produce 12 million barrel per day (bpd) and is currently producing 10.7 million bpd, Falih said, adding that production will rise further next month.
India plans to build two strategic storage facilities to hold 6.5 million tonnes of oil costing around 110 billion Rupees ($1.6 billion) through a joint partnership between an Indian state firm and private company. Falih also said Saudi Basic Industries Corp (SABIC) is keen to invest in India’s chemical sector. Saudi Aramco also has an initial pact to take a 25 percent stake in the planned 1.2 million bpd West Coast refinery.