Sentiment' pushing oil price

New Delhi: Oil minister Dharmendra Pradhan indicated on Tuesday that the United States sanctions on Iran is not about availability of crude oil but a “sentiment” issue which along with other factors is driving the prices higher.

The minister said that the government does not interfere in the pricing of petroleum products which had been deregulated, allowing state-owned retailers to fix rates of petrol and diesel based on the international benchmark.

“The government has no business to interfere in pricing mechanism of petroleum products which has been left to the oil companies to decide on a daily basis,” Mr Pradhan said.

Mr Pradhan warned that unless oil producing countries look at the affordability of the consuming country “alternative will be there.”

On US sanctions on Iran the minister said that issue is not availability but due to geopolitical challenges there is a sentimental issue.

“From day one, we are confident that there is no problem in sourcing of crude. There is plenty available in different parts of the world.”

“Issue is not shortfall. Issue is sentiment,” he said. Mr Pradhan said that oil production in Venezuela is sliding, which had significant share in world’s global crude basket. He said that all these factors along with Iran sanctions is pushing oil prices up.

On Prime minister Narendra Modi meeting with captains of domestic and global oil industry on Monday, Mr Pradhan said that Prime Minister was speaking from the prospective of consumer community of  emerging economies. During the meet, Modi had warned high oil prices stalling global growth and ultimately hurting producing countries.

However, Opec on Tuesday said it has not failed India and other major consuming countries as it restored stability in the market after four years of downturn.

Organisation of Petroleum Exporting Countries (OPEC) secretary general Sanusi Barkindo, however, said the stability achieved in past month is being threatened by headwinds from extraneous factors like frictions between leading trading partners of the world, revisal of monetary stimuli and upward movement in interest rates.

Speaking at the India Energy Forum, he said a year ago Prime Minister Modi, oil minister Dharmendra Pradhan and industry chieftains had “all commended the joint effort of Opec and non-Opec to rescue the industry from the downturn”.