April 18: India on Monday expressed its concern over the rising crude oil prices, which it claimed threatened global recovery. According to India, Asia’s third-largest oil consumer, speculation in commodity markets, unregulated over-the-counter (OTC) transactions and trading in ‘paper barrels’ are the factors which are increasing volatility in oil prices.
“Current oil prices will spur global inflation and retard economic growth,” said the minister of state for petroleum and natural gas, Mr R.P.N. Singh, at the 4th Asian Energy Ministerial Round Table in Kuwait. India is facing a huge subsidiary burden due to international crude oil prices crossing the $100 per barrel mark. At the current level, state-owned oil firms are projected to lose a massive Rs 1,77,500 crore on selling fuel at less than market rates. The difference between retail price and the imported cost for diesel is Rs 18.11 per litre, Rs 28.33 a litre for kerosene and Rs 315.86 on per 14.2-kg domestic LPG cylinder.
He said that given the dual role that crude oil now plays both as a physical commodity and a financial asset, there is a need to improve understanding on the inter-linkages between the two if “we are to address the issues of price volatility and price discovery in the oil markets.” He underscored the need for the regulation of price discovery of oil saying that it cannot be left entirely unregulated. “We need to consider establishing position limits and moving OTC activity on to regulated exchanges,” said the minister.