Oil prices surged to their highest level in more than a year on Thursday. The U.S. West Texas Intermediate futures reached $95.03 per barrel, marking the highest cost since August 2022.
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India’s minister of petroleum and natural gas warned that there’ll be “organized chaos” if oil prices break above $100 per barrel, but said the South Asian nation is well positioned to weather higher costs.
“If the price goes above $100, it’s not going to be in the interest of either the producing country or anyone’s interest. You will have large, organized chaos,” Hardeep Singh Puri told CNBC’s Dan Murphy during a panel at the ADIPEC oil and gas conference in Abu Dhabi, United Arab Emirates on Tuesday.
But “you should not be worrying about the impact on India. India’s a large economy that has a lot of domestic production. We’ll cut back, we’ll do something or the other,” Puri said.
Last week, oil prices surged to their highest levels in more than a year with U.S. West Texas Intermediate futures hitting $95.03 per barrel. Prices have since pulled back, standing at $89.44 a barrel in Wednesday morning trade in Asia.
While Puri was confident that India could navigate higher prices, he warned that other nations may not be able to do so.
“I would worry about what happens to other parts of the developing world … that is really a worrying point,” Puri said, highlighting that rising prices in the last 18 months have placed “100 million people into abject poverty.”
“They had to go from reasonably priced gas and cooking fuels [to] wet wood, coal or whatever they could get. That is the problem.”
Hardeep Singh Puri, India’s minister of Petroleum and Natural Gas, at the ADIPEC conference in Abu Dhabi, United Arab Emirates, on Tuesday, Oct. 3, 2023.
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The minister said on X, the social media platform previously known as Twitter, that oil producers need to be mindful of the struggles consuming countries face.
“During the pandemic, when crude oil prices crashed, the world came together to stabilize the prices to make it sustainable for the producers. Now, as the world is at cusp of economic recession & slowdown, oil producers need to show [the] same sensitivity towards the consuming countries,” he said in a post.
India’s energy transition
Puri also said the major energy challenge the world faces is addressing the “trilemma” of availability, affordability and sustainability. He claimed that India has “done well” on energy availability and affordability.
While India — the world’s third-largest oil importer and consumer — set a net-zero goal for 2070, other large economies have far earlier targets. China aims to reach carbon neutrality by 2060. Japan and the U.S. have targets for 2050.
Still, Puri reiterated how India’s sustainable energy transition is taking place at a “more comprehensive scale” and faster than what was originally anticipated.
He explained that major energy companies like Indian Oil Corporation, the Oil and Natural Gas Corporation and Bharat Petroleum have all set net-zero targets well ahead of 2070.
“When prices shoot up, people’s resolve to transition works faster … There’s a realization that we’ve got to get off our backsides and do things which are important.”