Saudi Arabia Asks India To Use Cheap Oil Bought Last Year To Bring Down Fuel Rates

International oil prices rose after OPEC+ and its allies ignored India's plea to ease production control, with Saudi Arabia asking New Delhi to instead use oil it bought at rock bottom rates last year.

Brent crude futures, the international benchmark for oil prices, rose $2.62, or 3.9% on Friday, to settle at $69.36 a barrel, its highest level since January 2020.

A stronger-than-expected US jobs report and a decision by OPEC and its allies not to increase supply in April pushed oil prices to their highest level in more than a year.

India's Oil Minister Dharmendra Pradhan had in the run-up to Thursday's OPEC meeting urged the producers' group to ease production curbs to fulfil their promise of stable oil prices. He felt rising international oil prices were hurting economic recovery and demand, said a PTI report.

Responding to a question on India's pleas, Saudi energy minister Prince Abdulaziz bin Salman at a press conference after the OPEC+ decision on Thursday said New Delhi should take some of the crude out of storage that they had purchased at very cheap rates last year.

"With regard to India, very simple. I would ask my friend that he withdraw some of the cheap oil that they bought in April, May and June (last year)," the Saudi Minister said.

"There is an opportunity cost for not withdrawing it now." India had purchased 16.71 million barrels of crude in April-May, 2020 and filled all the three Strategic Petroleum Reserves created at Visakhapatnam in Andhra Pradesh and Mangalore and Padur in Karnataka. The average cost of that crude purchase was $19 per barrel, according to Pradhan's written reply to a question in the Rajya Sabha on 21 September 2020.

Petrol and diesel rates in India are currently at all-time highs. These rates are revised on a daily basis by oil marketing companies in line with changes in the international prices and the rupee's exchange rate. Oil prices have been on a rise since January on optimism in the global economy in hopes for improving fuel demand as vaccines are rolled out.