Oil companies review import contracts with Saudi Arabia

Amid tensions over crude oil production cuts, the government has asked public sector oil companies to review import contracts with Saudi Arabia.

An official said on Friday that Indian Oil and Hindustan Petroleum Corporation Ltd were set to break the nexus between the producers of crude oil, to optimize prices and terms of contracts. HPCL has been asked to try to supply oil from outside West Asia with favorable terms.

The official said that traditionally producers of Saudi Arabia and the Organization of Petroleum Exporting Countries (OPEC) are our major suppliers. But their terms are generally against the buyers.

Saudi Arabia and other producers have the option to reduce supplies following OPEC’s decision to decrease production to raise prices. Consumers have to pay the price. India meets 85 percent of its crude oil needs through imports.

India advocated increasing production

India advocated increasing crude oil production. Foreign Ministry spokesman Arindam Bagchi said the high crude prices are impacting the recovery of the economy affected by Covid-19. Therefore, the supply of crude oil should be fixed according to the market. It should not be managed in an artificial way, but should be based on the market.

He said that India has been appealing to OPEC and its organizations to relax the control imposed on crude oil production since the beginning of this year. However, the production cut last week is quite small.