At a time when the Centre is facing flak for the high fuel prices, Union finance minister Nirmala Sitharaman has blamed the Congress-led UPA government for the steep prices. She said that the government would have reduced fuel prices if it did not have to bear the cost of the oil bonds that the UPA government had issued.
The finance minister said that the government cannot reduce excise duty on petrol and diesel for the time being. “If I had not incurred the UPA’s oil bonds worth over Rs 1.4 lakh crore, I would have given relief from petroleum prices,” she told reporters. Notably, international benchmark Brent crude was trading around $68.42 a barrel—a decline of 3.12% whereas US West Texas Intermediate (WTI) was trading around $66.03—a decline of 3.54%.
Sitharaman said that the Union and state governments will have to sit together, deliberate and find a solution for the high fuel prices. The Centre has alleged that under-recoveries of oil companies, thanks to oil subsidies, were converted into oil bonds by the UPA regime. The UPA government under former Prime Minister Manmohan Singh had issued oil bonds in lieu of cash subsidy to oil marketing companies that are up for redemption now.
With the easing of the COVID-19 situation across the world, the global economic recovery has gathered pace. The oil demand has also gone up, but the Organization of the Petroleum Exporting Countries (OPEC), and its allies known as OPEC+, has kept tight control on crude supply hike. In fact, after resolving a dispute between the UAE and other members of the organisation, the oil cartel last month decided to increase production by 400,000 barrels per day (bpd) a month from August until the remaining 5.8 bpd supply cut is over.
US asks OPEC to do more
Last week, the US government in an official statement urged OPEC+ to do more to support the global economic recovery. It said that an inadequate hike in crude supply is hampering the recovery process. The OPEC+ nations are going to meet next month to take a call on supply hikes. However, investment management firms have ruled out a supply hike by OPEC+ in the short term due to uncertainties over the growing Delta variant infections across the world, including China—the world’s second-largest oil consumer.
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