India says OPEC+ decision to hit consumption-led recovery, hurt customers

OIL PRICE - NEW DELHI. A decision by OPEC+ to continue with an output cut would undermine a consumption-led recovery and hurt consumers in oil buying nations, Indian oil minister Dharmendra Pradhan said on Friday.

The world's third biggest oil importer and consumer, India had been urging major producers to ease output cuts and help global economic recovery from the coronavirus pandemic as well as rein in prices.

"As one of the largest crude-consuming countries, India is concerned that such actions by producing countries have the potential to undermine consumption-led recovery and more so hurt consumers, especially in our price-sensitive market," Pradhan told Reuters.

OPEC and its allies agreed on Thursday to extend most oil output cuts into April, offering small exemptions to Russia and Kazakhstan, after deciding that the demand recovery from the coronavirus pandemic was still fragile despite a recent oil price rally.

The Organization of the Petroleum Exporting Countries and allies, together called OPEC+, extended oil output curbs into April, with small exemptions to Russia and Kazakhstan.

"It just goes to show how much of a surprise the OPEC+ discipline is," said Michael McCarthy, chief market strategist at CMC Markets.

"What makes the gain even more impressive is that it comes against a risk-off backdrop and a higher U.S. dollar," he said.

Oil prices usually fall when the dollar rises as a higher greenback makes oil more expensive for buyers with other currencies.

Investors were surprised that Saudi Arabia had decided to maintain its voluntary cut of 1 million barrels per day through April even after oil prices rallied over the past two months.

"An array of factors coalesced to bring the parties together, but the resultant price increase will almost certainly push the parties to change their minds when they meet again on April 1, 2021," commodity analysts at Citigroup said in a note.

"Whatever its rationale, from a pure market balancing perspective, OPEC itself has indicated that more than 2 million barrels per day (bpd) of oil will be required in the market by end-June. That need starts by mid- to late Apr’21, as refinery demand for crude starts growing before escalating through Aug’21."