‘Oil prices at $110 bigger threat than inflation’
NEW DELHI: Oil prices staying at $110/barrel could pose a bigger threat than inflation to the global economy, said petroleum minister Hardeep Singh Puri said.
High crude prices are adding to inflationary pressures and causing living standards to decline in a number of countries, Puri told CNBC TV18 in an interview at Davos. “Let’s make no mistake: oil at $110 a barrel constitutes a challenge for the entire world,” he said. Several of India’s neighbours in “severe dire straits.”
“If oil prices remain at $110 (per barrel) you are not just talking about inflation, then you’re talking about bigger threats. You know, that’s where the R (recession) word comes in,” Puri said.
“If the global economy goes in that direction, everyone, including the oil producers, will have to face the consequences,” he said.
Pain is being felt in India itself, where 60 million citizens fill up at the pump every day, Puri said. The ongoing energy crises show that consumers “need to move on the green path faster”.
In the interim, governments need to ensure there’s enough hydrocarbon-based fuels to satisfy present demand. “We need to make sure there is no energy shortage in any form in a large country,” he said.
India has trimmed tax rates on several products including fuels to tame inflation.
The petrol price on Sunday was slashed by ₹8.69 a litre and diesel by ₹7.05 per litre following reduction of excise duty on auto fuels to give relief to consumers battered by high fuel prices that has also pushed inflation to record high.
Meanwhile, the government raised export tax by 15% on eight steel intermediates and scrapped import duty on coking coal, shortages of which have been driving up steel prices.
India’s top steelmakers body warned on Monday that the export duty on steel products will “adversely impact” mills that have been aiming to boost exports and widen global market share following the outbreak of the Russia-Ukraine conflict. The world’s second-largest crude steel producer churned out a record 120 million tonnes in the fiscal year, which ended in March.
ArcelorMittal Nippon Steel India Ltd expects about 90,000 tonnes of steel exports every month to be hit by government’s duty increase, alongside a dampening effect on fresh investments, Dilip Oommen, chief executive officer, said on Monday. “Export duty imposed by Indian government will have repercussion on company’s export market,” Oommen said.