PM Narendra Modi stresses on moving to responsible pricing for oil

Efforts at artificially distorting prices are self-defeating, and cause undue hardships to the poor people in developing countries, Prime Minister Narendra Modi said while giving a call to build a global consensus on ‘responsible pricing’.

“The world has for too long seen prices on a roller coaster. We need to move to responsible pricing, which balances the interests of both the producer and consumer,” said Modi at the inaugural of the 16th International Energy Forum Ministerial in Delhi.

Crude oil prices have often been volatile, touching a high of $147 a barrel in 2009, and falling to $28 in early 2016. Crude prices are around $70 currently following healthy global demand and strong compliance by oil producers, led by OPEC and Russia, on cutting production to clear a supply glut facing the sector for four years.


Cartelisation by key producers has pushed up prices by about 45% since the middle of last year. "I believe, in this situation, around 60 is good price,” said Iran's oil minister Bijan Namdar Zangeneh.

"I think we should look at the market not for short term; long-term, mid-term is important for us.”

Saudi energy minister Khalid al-Falih said his country will not let another supply glut form in future but also didn't want prices to move to unreasonable levels.

Very high energy prices are good neither for consumers nor producers, said Fatih Birol, executive director at International Energy Agency. Higher prices reduce access to energy and affects economic growth in importing countries, affecting long-term demand for energy.

At the same time, very low prices cut investments in upstream projects and bring about shortage in future supply.

Birol said a rising shale production can keep prices in check. “If we see another price hike coming, there will be strong response from shale producers,” Birol said.