Much at stake as India, Saudi Arabia spar over oil prices | John Kemp

Much at stake as India, Saudi Arabia spar over oil prices | John Kemp

LONDON--Tensions this month between India and Saudi Arabia over rising oil prices have underscored the growing importance of their bilateral relationship and its potential to generate conflict as well as cooperation.

The decision by OPEC+, the Organisation of the Petroleum Exporting Countries and its allies, at the beginning of this month to leave output unchanged despite a near doubling of oil prices since the start of November sparked an angry exchange of words.

“The decision by OPEC+ has saddened us. It is not good news for India, China, Japan, Korea and other consuming nations,” India's minister for petroleum told Reuters earlier this month.

“We have asked companies to aggressively look for diversification. We cannot be held hostage to the arbitrary decision of Middle East producers,” an Indian government source said. In response, Saudi Arabia's energy minister said India should first use the stocks of crude it bought cheaply during the price slump in 2020.

In practice, there is too much at stake for both countries to permit the disagreement to poison their overall relationship.

Saudi Aramco has reportedly maintained supplies to India's refiners for April, even as it cut loadings for other parts of Asia, a sign the kingdom is keen to dial down the