OPEC: A partnership in energy security with India to ensure a...

Crude oil prices continued their losses this week due to the pressures of the rapid spread of the Corona epidemic and the delay in announcing the final results of the US elections, while they received limited support from the decline of the dollar and expectations that OPEC + will extend record production cuts to next year 2021 to meet the continuing deterioration in the levels of demand for Crude Oil.
While US crude fell by about 4 percent, while Brent crude recorded a level below $ 40 a barrel again, the Organization of Petroleum Exporting Countries (OPEC) expected India to be the largest contributor to the growing demand for oil in the long term, in addition to about 6.3 million barrels. Daily from now until 2045, pointing to the importance of strengthening the relationship between OPEC and India, which represents a major element in energy security, especially with OPEC’s role as a partner in the energy transition with consumer countries.
A recent report by the organization – on the results of the fourth high-level meeting of the energy dialogue between OPEC and India – said that the producer and consumer dialogue, with the support of OPEC and India, has greatly contributed to the success of efforts to achieve sustainable stability in the oil market in recent years.
The report pointed out that the global economy with all its parties is definitely facing great difficulty this year, but in light of these exceptional times, I can also say that OPEC, in cooperation with international partners, has continued to move forward and has also achieved great success, especially in the field of multilateral dialogue.
He pointed out that India is one of the fastest growing economies in the world and a major driver of global economic growth and growth in oil demand, pointing out that India imports about 80 percent of its oil from OPEC member states.
He noted the increasing investment relations between OPEC countries and India, noting that the joint dialogue allows OPEC to obtain a deeper understanding of the facts and figures related to supply and demand, and supports technical exchanges for both OPEC and India in their mandate to secure a stable energy future.
The report stated that there is consensus on the importance of supporting close interaction between OPEC and consumer countries such as India to face the common challenge of maintaining market stability to ensure a well-supplied market, stressing India’s conviction of the pivotal role of OPEC in maintaining the balance of supply and demand.
He pointed out that growth in India and many of the world’s economies has slowed significantly due to the spread of the Corona pandemic, which has greatly affected economies around the world, as India’s GDP growth fell in the last monthly OPEC report on the oil market to -7.5 per cent. Percent, year on year this year though it is expected to rebound again to 6.8 percent, year on year in 2021.
The report stated that the effects of the epidemic are extremely terrifying not only on the human level, but also with regard to the oil market and the global economy, as it led to the largest decline in energy and oil demand in living memory, explaining that the size of the epidemic and its spread are unprecedented.
The report praised the ingenuity of the measures taken by the partners in declaring cooperation over the past eight months, as they moved quickly and boldly to stabilize oil prices and restore balance to the oil market, noting that the participants collectively adjusted the production cuts over a two-year period, starting from 9.7 million barrels per day. It is the deepest and longest adjustment in history and nearly five times the historic adjustments that were made during the last downturn in 2014-2016.
He stressed that this dramatic measure helped to put the markets on the road to rebalancing, although the road to recovery is certainly still long and full of difficulty, pointing to Muhammad Barkindo saying that he is happy to see the rise in fuel demand in India in September for the first time since June. The easing of Corona restrictions supports economic activity and travel – according to government data.
He pointed out that the United States witnessed stronger than expected economic indicators in the third quarter of this year, with growth for 2020 revised up from -5.1 percent last month to -4.2 percent, in the latest oil market report, and he also expected significant growth in Total oil demand increased by +6.5 million barrels per day in 2021.
The report quoted Barkindo as saying that although we find ourselves in a difficult situation, we are optimistic that the future will be brighter, and that the world will witness a way out of this epidemic next year. He pointed to the importance of setting high standards to address climate change issues while supporting continuous work on improving energy efficiency, in addition to strong support for renewable energy sources through subsidies and tax incentives, which is already happening in India with good steps.
He stressed that all energy sources are needed to meet the growth in energy requirements in the coming decades, noting that the entire world is threatened by climate change, and that it is up to all energy producers and consumers to do their best to make all energy sources cleaner and greener.
He pointed out that the dialogue between OPEC and India focused on discussing the implications of the pandemic and its great impact on both the global economy and energy markets, including oil, pointing to the focus of the dialogue on discussing the medium-term prospects and challenges of energy and oil.
The report quoted Barkindo as confirming that India’s support for dialogue between producer and consumer has greatly contributed to the organization’s success in following up the sustainability of the oil market in recent years, and continues to do so during the current difficult period, indicating that throughout the pandemic period, OPEC has been in close interaction, not Only with the producing countries, but also with the major consumers like India.
He added that OPEC and the OPEC + alliance are seeking to address the unprecedented impact of the epidemic, which has represented a severe disruption in the market, through rapid and enlightened measures. The unprecedented decisions taken by the countries participating in the declaration of cooperation have received wide support from producers. And the main consumers, including the G20 ministerial meetings.
He pointed to Barkindo’s saying that India is one of the fastest growing economies in the world and a major engine for global economic growth and oil demand growth, pointing to India importing about 80 percent of its oil from OPEC member states and increasing investment relations with India.
The report affirmed India’s conviction that dialogue with OPEC is crucial to India’s energy requirements, as it meets 78 percent of India’s demand for crude oil, 59 percent of demand for LPG and about 38 percent of gas demand. In terms of value, India imported $ 92.8 billion worth of hydrocarbons from OPEC member states during the 2019-2020 fiscal year.
He pointed to India’s confidence that the recovery path of energy demand growth in India will continue in the coming months, highlighting the need to work with OPEC to jointly address current energy challenges and in the post-pandemic scenario, stressing the need for OPEC and India to cooperate in many projects. And investments, especially as OPEC looks to continue and deepen this cooperation in the future, as India was invited to join the cooperation pact as a major producer and consumer of oil to benefit from exchanges on related issues that affect the oil market.
On the other hand, and with regard to prices at the end of last week, oil prices decreased during Friday’s trading in light of the increasing concern about the Corona virus crisis and its damage to global demand, despite the dollar’s decline against most major currencies. And several countries announced the imposition of comprehensive closure restrictions again, especially in Europe, which in turn hurts the demand for goods, including crude.
On the other hand, by 17:53 GMT, the dollar index (against a basket of major currencies) fell by less than 0.3 percent, to 92.2 points, and recorded the highest level at 92.8 points, and the lowest level at 92.1 points. This has not been announced yet for the winner of the US presidential elections, but the preliminary expectations and results indicate that the Democratic candidate, “Joe Biden” will win at the expense of his Republican rival, “Donald Trump.”
In terms of trading, US Nymex crude futures for December delivery by 17:51 GMT decreased by 3.8 percent, to 37.3 dollars a barrel, and recorded the highest price today at 38.6 dollars and the lowest price at 37.06 dollars. Brent crude for December delivery fell 3.2 percent, to $ 39.6 a barrel, and recorded the highest price at $ 40.6 and the lowest price at $ 39.3.