May 18 (UPI) -- India should rest assured that Riyadh will do its part to ensure its economy can move forward in the face of higher oil prices, the Saudi energy minister said.
Saudi Energy Minister Khalid al-Falih said he made a telephone call to his Indian counterpart, Dharmendra Pradhan, to discuss the situation in the global oil market. Crude oil prices are up nearly 20 percent for Brent, the global benchmark, and up 5 percent since last week, when U.S. President Donald Trump pulled out of the Iranian nuclear agreement.
Falih said he offered assurances to the Indian minister following consultations with his colleagues in Russia and the United Arab Emirates, which holds the rotating presidency of the Organization of Petroleum Exporting Countries.
"Minister al-Falih assured Minister Pradhan that supporting global economic growth is one of the kingdom's key goals," a statement from the official Saudi Press Agency read. "He reiterated his commitment towards market stability and that the kingdom together with other producers will ensure availability of adequate supplies to offset any potential shortfalls."
Saudi Arabia is the de facto head of OPEC. Russia is the largest non-member state contributor to its effort to drain a five-year surplus from the oil inventories of the world's advanced economies with coordinated production cuts.
That effort, now in its second year, helped crude oil prices from historic lows in early 2016. Geopolitical concerns stemming from unrest in the Middle East to trade tensions between the United States and China, the two largest economies in the world, helped push Brent toward $80 per barrel, its highest level in nearly four years if it holds.
The possible loss of Iranian barrels has been a recent price supporter.
The price of oil may be approaching the point where it creates headwinds for the global economy, particularly for economies that depend on imports for their oil.
The Reserve Bank of India, the country's central bank, expects growth in gross domestic product this year at 7.3 percent, up from the 6.3 percent growth posted last year. OPEC economists in their monthly market report for May said trade tensions could be a mixed blessing for India. China is its largest trading partner, but India's trade deficit with Beijing has increased as a result.
Year-over-year, Indian imports of petroleum, crude oil and petroleum products increased more than 40 percent, according to economists at OPEC.
Saudi Arabian Oil Co. and French energy company Total in April agreed to build a refinery in India that carries a $44 billion price tag. At its peak, the refinery would be able to process 1.2 million barrels of crude oil per day, making it among the largest in the world.