High oil prices can remain a problem if large liquidity remains in the market even after the interest rate hikes by central banks, Minister of Petroleum and Natural Gas Hardeep Singh Puri said on Wednesday.
High oil prices can remain a problem if large liquidity remains in the market even after the interest rate hikes by central banks, Minister of Petroleum and Natural Gas Hardeep Singh Puri said on Wednesday.
“If you already have a large amount of liquidity, and all those interest rate hikes that you have utilised and not been able to mop up that liquidity, then high oil process remain a problem,” Puri said. “Half the world faces recession, another half will go into more recession.”
Oil prices have been following a very volatile trajectory since September after Saudi Arabia and Russia first extended their output cuts till the end of the year. Even as the markets saw prices moderating, a speculative risk premium was soon added to the prices owing to the recent Israel-Hamas war.
“I think the global markets will factor all things into account. And if the supply lines are not disrupted, hopefully, we will be able to navigate through,” the minister said while talking about the speculations on oil market owing to the Israel-Hamas conflict that broke out last Saturday.
The oil minister also believes that India will be able to navigate through the situation.
“We are watching this on a real time basis. And I’m confident that we (India) will navigate through this both on availability and other factors.”
Earlier this week, oil prices climbed 4% from their previous levels to $87 per barrel after the news of Hamas launching an attack at Israel. Although the region is neither a major producing nor exporting area of crude oil, concerns were raised if the war spreads to other regions of the Middle East as it accounts for almost one-third of the global oil production.
If crude oil prices go up, that has a very strong and adverse impact on the attempts of global economic recovery, Puri said.
Further, reiterating his comments that India will account for 25% of the global energy demand growth over the next two decades, the minister said that the country’s energy demand will continue to provide fuel for future economic growth.
India, also in the recently concluded G20 summit, launched a Global Biofuel Alliance with the United States and Brazil, talking about which Puri said that the platform will facilitate knowledge sharing on key aspects such as best practices, technology development, and policy learnings.
Source:financialexpress.com