Middle East crisis: Oil tops $100, nears 4-year high as Saudis cut production

Oil prices surged to $120 a barrel before retreating to $102 Monday as Saudi Arabia was reported to be cutting output, adding to the supply squeeze due to disruption in the Strait of Hormuz.Finance ministers of developed G7 nations, who met Monday evening, deferred plans to tap their strategic reserves to cool down the global flare-up in prices, while vowing to keep close tabs on the evolving supply situation.Although Brent prices touched the highest level seen since mid-2022, govt officials said there was no immediate plan to increase pump prices of fuel in India. “We are nicely placed vis-a-vis crude. There is unlikely to be a rise in petrol and diesel prices in the foreseeable future, even if prices remain at $110-120 a barrel,” said a senior govt official.

Iran conflict sends Brent soaring 65% since Feb 28

The Indian basket was on the verge of hitting $100 a barrel after having reached $99.12 on Friday, almost 40% higher than the Feb 27 level of $71.19. Since Feb 28, when the US and Israel bombed Iran, global benchmark Brent has surged as much as 65%.The statement came amid reports that Saudi Aramco had begun reducing production from two of its fields, joining Iraq, Kuwait, Qatar and the UAE, as they ran out of storage due to blocked shipments.Govt officials, however, reiterated that India has sufficient stock of oil and gas to meet domestic requirements. They also sought to dispel rumours of a scarcity of fuel and dismissed reports of shortages anywhere in the country. Officials also maintained there are adequate stocks of aviation turbine fuel. “India is also a producer and exporter of ATF; there is no need to worry,” said one of them.The disruptions have prompted govts to initiate emergency action. For instance, Japan, which imports around 95% of its oil from West Asia, has instructed a national oil reserve storage site to prepare for a possible crude release, while China has asked refiners to halt fuel exports. South Korea has capped prices for the first time in 30 years, while Vietnam removed import tariffs on fuels. Bangladesh has shut universities to conserve electricity and fuel.Panic across markets prompted G7 finance ministers to consider releasing crude from strategic reserves, a step officials said was not being considered by India as it sought to secure its supply lines.India, world’s third-largest oil-importing and consuming nation, has 5.3 million tonnes of underground strategic reserves, which are at 80% of their capacity. “The crisis (that led to a rise in prices) is not our creation. Those responsible have to deal with it and create situations to ease (prices). Ours is an India first policy,” said a govt functionary.India is not a full member of IEA and does not have an obligation to follow the diktat of the international body, officials added.