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India-China join hands to counter OPEC’s dominance in Asian oil market

To counter the oil producers’ cartel, OPEC who played havoc with prices, Oil Minister Dharmendra Pradhan floated the idea of forming the oil buyers’ club at the International Energy Forum (IEF) in April to negotiate better terms with the sellers as well as getting more US crude oil to Asia to put an end to the dominance of the oil block. 

Continuing the effort, Indian Oil Corp (IOC) Chairman Sanjiv Singh travelled to Beijing this month to meet Wang Yilin, Chairman of China National Petroleum Corp (CNPC), a top source said. 

Production cuts by OPEC have led to international oil prices hitting a four year high last month that forced a Rs 3.8 per litre hike in petrol and Rs 3.38 a litre increase in diesel prices. Rates however started to cool towards month end and retail prices have been cut thereafter. 

Attempts on the same line by earlier Oil Ministers also did not succeed. 

Instead of giving discount to bulk purchasers, the oil producers like Saudi Arabia charged so-called ‘Asian Premium’ for shipments to Asian buyers. Like producers having a say in the matter of pricing, the bulk consumers also must have a say which will be possible if the oil buyers’ club comes into existence; this is the major line of thinking by Pradhan. 

At the 16th IEF ministerial meet in April this year, India and China, which together accounted for 17 per cent of world oil consumption last year, agreed to look for ways to leverage the combined size of their imports for a better bargain from West Asian crude producers. 

By 2023, oil demand will hit 104.7 million barrels per day, up 6.9 million bpd in 2017, according to the International Energy Agency. "As has been the case for some years, China and India together will contribute nearly 50 per cent of global oil demand," the agency had said in a report.


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