| Oil on the boil
New Delhi, July 13: India, USA, China and Japan are coming together to lobby for a better deal from oil exporting countries in the wake of the relentless rise in international crude prices.
Interestingly, China has taken the lead this time around and plans to host a five-nation conference of oil ministers to chalk out a joint strategy. South Korea, which is also heavily dependent on imports, is the fifth country that will join the talks.
Senior Indian Oil and petroleum ministry officials left for Beijing earlier this week to prepare the groundwork for the issues that will be taken up at the minister-level talks, which will be held two months from now.
The booming Chinese and Indian economies are seen as important factors in propelling the demand for crude.
A joint strategy could involve ensuring a degree of co-ordination when planning imports so that the countries can cut down competition, which tend to push up spot prices. The planning would pertain to both the timing and geographical spread of crude purchases, a senior oil company official said.
The five nations are expected to take up the issue of crude prices directly with the selling nations as they believe that the current levels cannot be justified solely by higher demand.
If major crude buyers come together, it would provide some countervailing power to the sellers’ cartel represented by Opec.
However, the fact that oil is an essential commodity which has to be purchased puts limitations on the extent to which buyers can co-operate with each other.
The five-nation meet appears to have a broader agenda than the Asian buyers and sellers meet held in New Delhi last year.
Prominent buyers are coming together in an effort to try and do something to bring crude prices under control and the US has also extended its support.
Opec countries have been saying the current levels, which are well over $70 per barrel, are too high. However, they have not done enough to bring them down either.
Oil industry experts also feel speculation is a major factor behind the price rise over the last year.
Vested interests are at work to influence the mindset of buyers to make them believe that prices would go up further.
If major buyers ensure closer co-operation and share genuine information among themselves, speculators will not be able to influence the market as much as they do now.
India and China have, until now, been competing with each other over the acquisition of oilfields and exploration of blocks abroad.
Their coming together on the issue of international crude prices marks a pathbreaking step born out of economic necessity.