November 15, 2001

    Shri Ram Naik, Minister of Petroleum & Natural Gas, has said that t here is no need for revision in the prices of petroleum prices in the domestic market as OPEC has decided not to effect any cuts in oil production up to 1^st January, 2002.

    Responding to OPEC’s announcement of conditional oil production cuts to be effective from 1^st January next year, Shri Naik said that it has resulted in the drop of prices in the international oil market. This situation suggests that oil prices may remain at lower levels at least up to December 2001. The lower oil price levels being witnessed from mid September 2001 have a favourable impact on the oil pool deficit of the country. "Under this low price scenario, the oil pool deficit of Rs. 13,000 crore as of end October 2001 is expected to decline. Considering this situation there is no need for any increase in the prices of petro products in the domestic market", Shri Naik added.

    It may be recalled that OPEC has formally announced plans to cut oil production by 1.5 million barrels per day w.e.f. 1^st January 2002 subject to the condition that non OPEC exporters like Russia, Norway, Mexico and others also cut oil production by at least half a million barrels per day. OPEC considers it necessary to cut oil production due to fall in the oil prices in the international market, arising from a decline in global oil demand. OPEC which had carried out a series of production cuts unilaterally in the past few years to support oil prices in the international market is averse to doing so now possibly to avoid a loss of market share.