Oil rose to around $67 a barrel on Tuesday, supported by Saudi Arabia's resolve for further voluntary supply cuts in April and a decline in oil exports from Venezuela due to a power outage. Crude prices rallied this year after the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, agreed to cut supplies from January 1, 2019, to support prices. Venezuela's state-run oil firm PDVSA has been unable to resume crude exports from its primary port since a power outage last week.
Saudi Arabia plans to cut its crude oil exports in April to below 7 million barrels per day (bpd), while keeping its output "well below" 10 million bpd. The move is aimed to check the supply gut and control prices. The Organization of the Petroleum Exporting Countries (OPEC) and other producers such as Russia had agreed in December to reduce oil supply by 1.2 million bpd from January 1, 2019 for six months.
Oil minister Dharmendra Pradhan has asked world's largest oil exporter Saudi Arabia to play an active role in keeping rates at a reasonable level. Petrol and diesel prices, which are revised daily, have risen by over Rs 2 per litre in last one month triggered by the rising international oil prices. Saudi Arabia is the second largest supplier of crude and LPG to India. In 2017-18, India's crude oil imports from Saudi Arabia were 36.8 million tonne.
Oil prices fell on Friday after the European Central Bank (ECB) raised concerns over economic slowdown. Record US crude output and export could offset supply cuts by OPEC and its allies. US crude oil production has increased by more than 2 million since early 2018 bpd to an unprecedented 12.1 million bpd. That makes America the world's biggest producer, ahead of Russia and Saudi Arabia.
Weekly US crude imports fell to a 23 year low after OPEC members Saudi Arabia and Venezuela cut their supply to unusually low levels. Weekly crude imports fell by 1.61 million barrels a day to 5.92 million for the week ended February 22, the lowest level since 1996. However, domestic crude production surged to 12.1 million barrels a day. Venezuela oil shipment is reeling under US sanctions.
Saudi Arabia is looking to make India a regional hub for supply of crude oil and will invest billions of dollars in the country to build storage facilities and strengthen refineries, Saudi Foreign Minister Adel bin Ahmed Al-Jubeir said. Saudi Arabia, the world's biggest oil exporter, will invest in infrastructure that will help India boost its ability to import and export petroleum products. Recently, Saudi Aramco, the world's top oil exporter, had announced that it will be part of a joint venture project to set up world’s largest greenfield refinery in Maharashtra at a cost of $ 44 bn.