Union Petroleum and Natural Gas Minister Hardeep Singh Puri on Tuesday said there is no shortage of crude oil in the world and enough refining capacity in the country to meet the domestic requirements.
Referring to geopolitical tensions in the Middle East, the minister said it was his personal assessment that things will calm down, noting that it is in everybody's interest not to allow exaggeration to take place because everyone suffers.
"There is no shortage of crude oil in the world," said Puri while replying to a question on the sidelines of an event regarding 'Rozgar Mela' here.
"Prior to all these developments, the total amount of crude, which was produced in the world, was close to 105 million barrels a day. OPEC+, a group of producing countries, voluntarily cut about 5 million barrels (a day).
"If you talk to them, they will say they do not deal with prices but if you limit the quantity which comes into the market, then you are obviously affecting prices. It came down to 97 (million barrels)," he said.
"Then you have geopolitical tensions. What happens in geopolitical tension in a particular area, oil takes a different route so cost of freight goes up, cost of insurance goes up," he said.
"How do you calculate the prices of oil? International price of crude, you add insurance cost, cost of freight, refiners' margin and dealers' margin.
"And in all that we are still amongst the lowest prices of petrol and diesel in the world. Why? Because on two occasions the Prime Minister in November 2021 and May 2022, we reduced the central excise duty," he said.
Further, he said, "Today there is no shortage of oil and even today after all these geopolitical tensions, Iran, Israel, etc, prices of oil should be around 72-73 dollars a barrel. The market is factoring these things in."
He added that there is also no shortage of refining capacity in India.
"We have about 270 million metric tonnes per annum and are already raising it to 310.
"There is enough crude available in the market, there is enough refining capacity and we have a very good distributors network. We have a very good arrangement with them. So there is no apprehension there," the minister said.
"If you are asking me a question that what will happen in the Middle East, three months from now and six months from now. It is my personal assessment that things will calm down.
It is in everybody's interest not to allow exaggeration to take place because everyone suffers."If oil supplies get disrupted, freight rate goes up, insurance rate goes up and I am hoping that it does not happen," he added.
Puri said new oil is coming into the market. "Brazil is getting another 4,00,000 barrels a day. The US is likely to bring more oil to the market," he said.
